Wednesday, January 03, 2007

Department of Justice Antitrust Enforcement: 2006 Achievements

This posting was written by Jeffrey May, editor of CCH Trade Regulation Reporter

The number of enforcement actions brought by the Department of Justice Antitrust Division was up in 2006 over 2005. Investigations continued into the international cartel that fixed prices for high-tech dynamic random access memory (DRAM), as well as anticompetitive conduct in other industries, including ready-mixed concrete, freight forwarding services, offered to the U.S. military, and telecommunications. The Antitrust Division also announced in 2006 its first charges in the hydrogen peroxide and sodium perborates industries, the magazine paper industry, and the unprocessed fur pelt industry.

Court Challenges

Aside from the numerous guilty pleas, the Antitrust Division had several successes in court. In May, the U.S. Court of Appeals in New Orleans upheld the antitrust conviction of an executive for a vitamin manufacturer; however, the case was recommended for resentencing. Also in May, the U.S. Court of Appeals in Philadelphia ruled that a district court lacked the power to enjoin the Antitrust Division from filing an indictment after the government withdrew its grant of conditional leniency to Stolt-Nielsen S.A. In September, the Antitrust Division announced that a federal grand jury in Philadelphia indicted Stolt-Nielsen, two of its subsidiaries, and two company executives for conspiring to restrain trade in the parcel tanker shipping industry.

In the civil enforcement area, the federal district court in Chicago refused to dismiss an action challenging the policies of the National Association of Realtors for unreasonably restraining competition in the brokerage service markets.

Mergers and Acquisitions

Merger enforcement by the Antitrust Division generated some of the biggest antitrust news of 2006. In the telecom sector, the Antitrust Division approved without conditions the proposed acquisition of BellSouth Corporation by AT&T in October. Leaders of the House Judiciary Committee had urged the Antitrust Division to delay issuing any final decision on that proposed transaction until the federal district court in Washington, D.C. issued its public interest determination with regard to proposed U.S. consent decrees resolving antitrust concerns over the mergers of SBC/AT&T and Verizon/MCI. Those settlements were announced in October 2005.

The Antitrust Division in March closed its investigation into the proposed acquisition of the McClatchy Company’s Contra Costa Times and the Mercury News by MediaNews Group Inc. In an earlier settlement, McClatchy Co. and Knight Ridder, Inc. agreed to divest the St. Paul Pioneer Press to resolve antitrust concerns over their proposed multi-billion dollar newspaper merger.

Dairy Farmers of America, Inc., a national milk marketing cooperative, resolved a three-year-old lawsuit challenging its acquisition of Southern Belle Dairy Co. LLC, with a divestiture agreement on the eve of trial in October.

The Antitrust Division brought a gun-jumping case in April against two high-tech companies that merged earlier in the year. To settle charges that they violated premerger waiting period requirements, the companies agreed to pay a total of $1.8 million in civil penalties.

The Justice Department and the FTC jointly released a “Commentary on the Horizontal Merger Guidelines” in March. Further efforts to streamline the merger process came with amendments to the 2001 “Merger Review Process Initiative” in December.

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