Antitrust

Bayer Faces U.S. Hurdles for Monsanto Antitrust Nod

By Nalattaporn Pichaisawad, LL.M. Candidate 2018 | Posted on

The road to success is not a bed of roses. Although their deal was approved by more than thirty authorities around the globe, Bayer A.G. (“Bayer”), the German conglomerate chemical firm, still faces a legal challenge in the United States to win antitrust approval to buy American seeds supplier Monsanto Company (“Monsanto”). The U.S. government is worried that $62.5 billion deal could seriously hurt competition.

Looking back to August of last year, the decision on whether to approve the symbolic transaction has been postponed twice and suspended four other times. The deadline for the merger approval is currently scheduled to take place on April 5, 2018.

The significant proposed acquisition between Bayer and Monsanto would make the company the world’s largest integrated pesticide and seeds business. In fact, this would create a company with a market share of more than a quarter of the world’s seed and pesticides business. The transaction will constitute to the destruction of competition in at least three markets: pesticides, seeds, and traits.

In the United States, EU, and Brazil, the authorities are attempting to conduct further investigation of how combining Bayer and Monsanto will impact the price and supply of key products for farmers.

One of the effective solutions to solve potential antitrust issues is to sell a company’s assets when company seeking regulatory approval for a deal. After the CEO meetings, Bayer decided to resolve antitrust issue by selling assets to another company in order to carry out its project and achieve its $60 billion-plus takeover of St. Louis-based Monsanto. In particular, Bayer agreed to sell parts of its seed and herbicide assets to rival, BASF, for $7 billion to solve EU regulatory concerns. Moreover, Bayer agreed to divest its vegetable seeds business to BASF.

In the EU, the review of the Monsanto deal by the European Commission (“the Commission”) is set to greenlight after in-depth investigation by the Commission. The European Competition Commissioner, Margrethe Vestager, indicated that Bayer properly addressed its concern by selling its assets to competitor. She firmly stated that “Our decision ensures that there will be effective competition and innovation in seeds, pesticides and digital agriculture markets also after this merger.” The competitors can effectively compete with each other and the number of the competitors in these relevant markets will remain the same.

However in the United States, the intense review procedure is being led by Assistant Attorney General for the Antitrust Division, Makan Delrahim, who also spearheaded the filing of the antitrust lawsuit to block AT&T Inc.’s takeover of Time Warner Inc.

From the Justice Department’s antitrust division’s view, although selling the assets to BASF, a good buyer who can compete effectively in the business, does help with some of the issues, the officials do not think it goes far enough.  The government would like Bayer to take a step further and divest more.

In its substantive standard of review of the proposed merger, the Justice Department is analyzing the economic relationship among entities on the same level of market (“horizontal restraint”) as well as the economic relationship along supply chains (“vertical restraint”)

No one knows what the future holds, but the companies still have hope after two previous deals – the combination of Dow Chemical Co. and DuPont Co. and China National Chemical Corp.’s takeover of Syngenta AG that won antitrust clearance.

 

Bayer Faces U.S. Hurdles for Monsanto Antitrust Nod (PDF)

With Profits and Consolidation on The Rise, Will Antitrust Litigation Follow?

By Travis Mitchell, J.D. Candidate 2019 | Posted on

During the 2016 election cycle, much has been made of the economy and how it appears to be rigged against the little guy. Both presidential candidates have been trying to position themselves as the solution for bringing profits back to Main Street and cleaning up “big business.” During the Democratic primaries, Bernie Sanders based his campaign on the very idea that the U.S. needed a political and economic revolution, and recent political superstars, such as Elizabeth Warren, have been ringing the bell of economic reform for the past two years. There is evidence that this is not simply politicians attempting to draw policy distinctions among themselves, but a true reflection of what Americans are feeling. According to the Pew Research Center, the economy is the number one concern among likely voters with 84 percent listing it as “highly likely” to influence their vote in the 2016 election. There is no doubt that much of this is rooted in the belief that the economy is rigged against the average American in favor of large corporations. Recent polling has found that over 70 percent of Americans believe that the economy is rigged in favor of certain groups.

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EU Opens In-Depth Antitrust Review of Merger between London Stock Exchange and Deutsche Börse

By Huan-Ting Wu, J.S.D. Candidate | Posted on

European antitrust regulators announced on September 28, 2016 that they would open an in-depth investigation into the proposed all-stock merger between the London Stock Exchange (LSE) and Deutsche Börse (DB). If the merger goes ahead, LSE shareholders will own 45.6% of the new holding company with the rest being held by DB shareholders. The $28 billion deal was first discussed in May 2000, but the parties didn’t reach a final agreement until March of this year. Shareholders from both exchanges approved the deal in July. The deal is expected to produce £215 million in annual cost savings over five years.

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Vitamin C Antitrust Judgment Overturned

By Yuxuan Wang, LL.M. Candidate 2017 | Posted on

A recent ruling of United States Court of Appeals for the Second Circuit in an antitrust case has posed challenges for plaintiffs in current and future cases.

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Rise of Institutional Investors Raises Questions of Collusion

By Aicha Ahardane, LL.M. Candidate 2016 | Posted on

In recent years, institutional investors like BlackRock have grown to own 70% of the public stock market. This growth is particularly noticed in horizontal shareholdings in concentrated product market, like airlines, causing them to compete less vigorously with each other. For instance, 7 institutional shareholders who controlled 60% of United Airlines also controlled major rivals such as Delta Airlines (27.5%) and Southwest Airlines (22.3%).

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Halliburton-Baker Hughes Merger Hits Antitrust Roadblock

By Alisha Mahalingam, J.D. Candidate 2018 | Posted on

On April 6, 2016, the United States Justice Department announced the filing of an antitrust suit in the U.S. District Court for the District of Delaware to block the proposed merger between Halliburton and Baker Hughes—citing its potential to “eliminate vital competition, skew energy markets and harm American consumers.” Originally brokered in 2014, the $35 billion deal would bring together the second and third largest oil field service firms in the world. Attorney General Loretta Lynch has voiced concerns that this merger of two of the top three firms would serve to create “non-competitive duopolies” in twenty-three separate markets throughout the United States.

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SEC Cracks Down on Hidden Mutual Fund Fees

By Sean Pinckney, J.D. Candidate 2018 | Posted on

In what could be the tip of a legal iceberg, the Securities Exchange Commission (“SEC”) filed proceedings on September 21st against First Eagle Investment Management, a $100 billion asset manager. The SEC alleged that First Eagle illicitly charged its investors nearly $25 million more in marketing fees beyond the limits allowed by the firm’s 12b-1 plan. The action against First Eagle is the first case of its kind arising under the SEC’s “Distribution-in-Guise Initiative,” an investigation into whether mutual fund managers are improperly disguising certain expenses as those that should be borne by investors and not the funds themselves. First Eagle reached a settlement with the SEC for over $40 million without admitting or denying the findings and will be returning the unlawfully charged fees to affected investors.

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Justice Department Files Antitrust Lawsuit to Block GE-Electrolux Merger

By Kevin Jones, J.D. Candidate 2018 | Posted on

On July 1, 2015, the Department of Justice filed suit under federal antitrust statutes in the U.S. District Court for District of Columbia against AB Electrolux for its attempt to acquire General Electric for $3.3 billion, halting the potential buyout. The Department of Justice alleges that the multinational corporation’s buyout of GE would combine the two largest appliance manufacturers of ranges, cooktops, and wall ovens, effectively diminishing vital market competition.

Deputy Assistant Attorney General Leslie C. Overton of the Antitrust Division announced that the lawsuit “seeks to prevent a duopoly in the sale of major cooking appliances,” since allowing the merger would leave Electrolux and competitor Whirpool with control over 75% of U.S. sales. The DOJ contends the lack of competition would leave millions of American citizens and families vulnerable to major price increases in two major ways: directly for homeowners and indirectly for property lessees who will pay higher rents as a result of commercial builders passing off the costs of higher unit costs.

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Antitrust Regulators Take Aim at Google

By Yu Tanebe, J.D. Candidate 2017 | Posted on

Technology giant Google Inc. (NASDAQ: GOOGL) is facing mounting scrutiny from antitrust regulators across several continents.

Last month, Google received a preliminary report from the Competition Commission of India who, after a three-year investigation, voiced concerns about the company’s dominant position in search and online advertising, and its anti-competitive behavior.

More recently, Russia’s Federal Antimonopoly Service, the country’s antitrust regulator, found Google guilty of “abusing its dominant market position.” The agency’s probe began in February 2015 after Yandex NV, Russia’s biggest internet firm, accused Google of unfair practices with respect to how the company bundles apps with its Android mobile operating system. While the probe did not find the company guilty of “unfair competition practices,” the agency was expected to issue a full ruling on the case later this month.

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Second Circuit Affirms Apple’s E-Book Antitrust Violations

By Dylan Peterson, J.D. Candidate 2017 | Posted on

The United States Court of Appeals for the Second Circuit affirmed a 2013 United States District Court decision that held that Apple “orchestrated” an illegal conspiracy with book publishers to raise prices on e-books. The Second Circuit held that the conspiracy “unreasonably restrained trade.” The three-judge panel reached a 2-1 split decision.

The Justice Department and state attorneys general initially brought the action against Apple in 2012. Apple’s decision to force a trial in the case has been framed in the media as a “bold decision.” In contrast, the book publishers named in the case settled with the Justice Department, states, and private plaintiffs shortly after the suit was brought. (more…)