Wednesday, June 29, 2011

Antitrust Chief Details Accomplishments of Last Two Years

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

Christine Varney, Assistant Attorney General in charge of the Department of Justice Antitrust Division, told attendees of a U.S. Chamber of Commerce event on June 24 in Washington, D.C. that after more than two years on the job, "the time is ripe to examine whether the Antitrust Division has been steadfast in ensuring vigorous enforcement of the antitrust law, as I promised upon confirmation." Varney talked about civil merger and non-merger enforcement, among other topics.

Merger Enforcement

With respect to merger enforcement, Varney said the Antitrust Division was committed to going to court “where the parties have been unwilling to resolve the anticompetitive aspects of their transactions.”

Two current merger challenges were cited: H&R Block Inc.’s proposed acquisition of the maker of TaxACT do-it-yourself tax preparation software, and the combination of point-of-sale (POS) terminal sellers VeriFone Systems Incorporated and Hypercom Corporation. She also noted the recent settlement in a third matter involving the acquisition of a Tyson Foods Harrisonburg chicken processing complex by George’s, Inc.

Varney also discussed mergers and acquisitions that involved vertical theories. Among the transactions that have arisen in the past few years were: ticket seller Ticketmaster Entertainment, Inc.’s acquisition of concert promoter Live Nation, Inc.; a joint venture between Comcast Corp. and General Electric Co.’s subsidiary NBC Universal Inc.; and Google’s acquisition of ITA Software Inc.—a company that develops and licenses a search software product used by the travel industry to perform flight searches and offer airfare comparison and booking websites.

The transactions demonstrate that “business is frequently looking for strategic acquisitions that offer the synergies and efficiencies presented by combining various levels of production.”

As with the purely horizontal transactions, the Antitrust Division reviewed these transactions "in light of their specific facts and market conditions and evaluated the competitive harms," said Varney. "In each case, we concluded that the transactions, as proposed, would give rise to competitive harm, and while we were prepared to sue, the parties agreed to consent decrees that addressed our concerns."

Civil Non-Merger Enforcement

Varney also mentioned that the Antitrust Division remained active in civil non-merger enforcement. She pointed to two matters in ongoing litigation—the Antitrust Division’s lawsuit challenging Blue Cross Blue Shield of Michigan’s Most Favored Nation Clauses with hospitals, and the Antitrust Division’s challenge to merchant fees in its lawsuit against American Express.

Another example of civil enforcement was the recent settlement in the Justice Department’s first case since 1999 challenging a monopolist with engaging in traditional anticompetitive unilateral conduct against United Regional Health Care System of Wichita Falls—a dominant health care provider.

Competition Advocacy

The antitrust chief discussed competition advocacy and regulatory outreach across the government. The Division works with a broad range of federal and state agencies to promote competition principles in important industries, including agriculture, telecommunications, energy, financial services, and healthcare.

“Among my competition advocacy priorities when I arrived at the Division was to explore the appropriate role for antitrust and regulatory enforcement in American agriculture, and this required collaboration at many levels,” said Varney, citing a series of workshops hosted by the Antitrust Division and the U.S. Department of Agriculture.

The Division has worked collaboratively with the Department of Transportation, the Federal Energy Regulatory Commission, the Securities and Exchange Commission, and the U.S. Commodities Futures Trading Commission, said Varney.

An example of cooperation with other federal and state agencies has been the ongoing municipal bonds investigation. The Division played a “key role” in obtaining an agreement from Bank of America to pay $137.3 million in restitution and disgorgement to state and federal agencies for its participation in a conspiracy to rig bids in the municipal bond derivatives market and as a condition of its admission into the Department of Justice’s Antitrust Corporate Leniency Program.

Bank of America entered into agreements with the SEC, the Internal Revenue Service, Office of the Comptroller of the Currency, and 20 state attorneys general.

Text of the remarks (“Vigorously Enforcing the Antitrust Laws: Developments at the Division”) appear here on the Department of Justice Antitrust Division website.

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