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Mergers under a Microscope?

A busy year for the Department of Justice, yes, but it probably does not signal a trend.
Marielle Segarra, CFO Magazine
December 1, 2011

Antitrust lawyers at the Department of Justice had a busy year in 2011. In late August, the department filed a lawsuit to block AT&T's acquisition of T-Mobile, the third deal it has opposed this year, along with H&R Block/Tax Act and a deal involving a small poultry-processing company. In contrast, until this past May, the DoJ had blocked only about 6 deals over the past decade. It has also secured divestments or other changes in at least 11 deals this year, a slight increase over recent years.

The flurry of activity could be the result of a shift in policy. When President Obama took office, he expressed his commitment to antitrust regulation. Under this Administration, the DoJ has increased its scrutiny of both vertical and horizontal deals, says David Wales, a partner in the antitrust group at Jones Day and a former antitrust enforcer at the DoJ and the Federal Trade Commission. "The current Administration is a bit more aggressive" than its predecessors, Wales says.

There is no clear trend toward a tougher stance on antitrust regulations.

But the recent increase in antitrust actions could also be a natural fluctuation, says David Meyer, a partner at Morrison Foerster who also formerly worked in the DoJ's antitrust division. The number of challenges from the DoJ in a given year can vary significantly, Meyer says, depending on the nature of the deals companies propose. Currently, "for whatever reason, there do seem to be a number of transactions raising competitive problems where there is no easy solution [short of blocking the deal outright]," he says.

Ultimately, says Wales, gauging the DoJ's approach toward merger enforcement by looking at a single year's figures may be unwise. "I think oftentimes people try to use those [numbers] to say, 'This Administration (or enforcement agency) is being more aggressive than its counterparts,'" he says. But most of the deals proposed this year fall "within the antitrust norm," he says, and would have raised concerns in most Administrations, because they involve high concentration levels or alleged monopolies. For this reason, he adds, "it would be a mistake to characterize [the recent increase] as a sea change."




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