December 22, 1997

The Intel investigation 20 years after FTC industry study

While there are many patents in this industry, patents do not appear to be a major barrier to entry. Indeed, the key patents such as those held by Western Electric, Texas Instruments and Fairchild Camera, appear to be made available to any firm at reasonable royalties. – FTC Staff Report on the Semiconductor Industry: a Survey of Structure, Conduct and Performance, January, 1977

Twenty years ago, the FTCs Economics Bureau prepared a major study of competition problems in the …

December 8, 1997

Regulators and antitrust agencies still have different views of deregulation;
FTCs Baer cautions on mergers, DOJs Marquis proposes stranded costs tax

The FTC, Antitrust Division and Federal Energy Regulatory Commission (FERC) were represented by senior officials at a conference on deregulation of the nations electric power industry last week, and it is clear from their remarks that FERC remains more enamored of regulatory solutions than do the antitrust agencies, despite rhetoric somewhat to the contrary.

Considering that the U.S. electricity business is said to represent …

November 24, 1997

Merger review in the wake of Staples/Office Depot

Since the FTC successfully neutralized the parties econometric arguments in the course of blocking Staples attempt to acquire Office Depot, the agency is now frequently requesting econometric studies when it issues Second Requests under the Hart-Scott-Rodino Act, sources say.

The effect is both to alert the agency to econometric arguments that could surface during litigation and to extend the time it takes parties to comply with Second Requests by as much as four months, the time …

November 10 1997

Klein mulling a merger moratorium
in deregulating industries

One thing Assistant Attorney General Joel Klein has already learned from the ongoing deregulation of telecommunications is that mergers might not be a good thing. In response to questions during testimony before the House Judiciary Committee Klein noted that a moratorium on mergers in deregulating industries for a brief period — perhaps three years — might not be a bad idea.

In a shake out period we dont know enough about how mergers will …

October 27, 1997

FTC close to challenging eye surgery patent pool

In 1994, the Antitrust Division opened an investigation of a joint venture formed by the only two firms with FDA approval to market machines that use computer driven lasers to perform a procedure for correcting myopia by cutting precision slices in the cornea.

Sometime in 1995, the FTC took over the investigation [FTC:WATCH No. 444, November 6, 1995], which focused on the possibility that the firms patent pool might be nothing more than a scheme …

October 13, 1997

Government’s prognosis for future health care mergers

The FTC is turning to new research to prove that non-profits, just like their for-profit brethren, can wield market power to the detriment of consumers. An analysis by two FTC Economics Bureau economists supports that view, as does an outside analysis awaiting publication. Another study is underway, and FTC staff members are discussing the possibility of examining past non-profit hospital mergers to examine whether efficiencies argued during the merger review process were actually realized post-merger.

The …

September 29, 1997

FTC investigation of Intel tracks earlier Microsoft case

On September 11, the Commissioners voted to authorize the agencys antitrust staff to use compulsory process To determine whether Intel Corporation has engaged in, or is engaging in, deceptive acts or practices in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act Trade Commission Act, 15 U.S.C. 45, as amended, by acting to monopolize, or otherwise restrict price or nonprice competition in the development or sale of microprocessors or other computer components …

September 15, 1997

New antitrust doctrine slowing the merger review process

Hogan & Hartson partner Tom Leary used to advise merger clients to pay little attention to second requests issued from the enforcement agencies: on the grounds that they are purposely overbroad, and agency staffs almost unfailingly negotiated for the documents they really needed. But in the past year, Leary has been more likely to advise clients to seriously consider the task of fully complying with the second request, despite the months it typically takes and the tremendous expense. …

July 28, 1997

Merger watch

Both the FTC and European Community competition officials pressured Airbus Industrie heavily to buy McDonnell Douglas’ commercial aircraft business before allowing Boeing to acquire the firm, according to sources familiar with the investigations on both sides of the Atlantic.

When Airbus repeatedly declined — and the FTC couldn’t scare up a single airline willing to complain about the merger — the U.S declined to challenge, and the E.U. was left with only conduct remedies. According to government sources, the FTC interviewed 40 …

July 14, 1997

FTC v. Staples and Office Depot: did the docs do it
or was it A Tournament of Econometrics

Early on in his memorandum opinion explaining his decision to honor the FTCs request to enjoin the merger of consumable office supply superstores Staples and Office Depot, U.S. District Judge Thomas F. Hogan noted his and others initial gut reaction to the FTCs product market definition.

Tell it to the arbs.

Its clear from Hogans opinion that the FTCs successful prosecution of this case rested …

June 30, 1997

Merger Watch

The FTC will close its investigation of Boeing’s acquisition of McDonnell Douglas this week without any antitrust enforcement action, FTC:WATCH has learned.

According to informed sources, the agency couldn’t find either any complaining customers or any buyers for McDonnell Douglas’ commercial aviation manufacturing business, although agency lawyers contacted at least one Korean firm and even approached Lockheed Martin Corp.

On the other hand, experienced antitrust litigators note, McDonnell Douglas would not normally qualify for a “failing company” or “failing division” …

June 9, 1997

Ganging up on Klein

Acting Assistant Attorney General Joel Klein’s nomination for the full-time job cleared the Senate Judiciary Committee’s Antitrust Subcommittee with no difficulty [FTC:WATCH No. 478 May 5, 1997], but has suddenly run into opposition from at least three U.S. senators who don’t serve on the Judiciary Committee, Conrad Burns (R-Mont.), Ernest Hollings (D-S.C.) and Ted Stevens (R-Alaska). All three have placed a “hold” on Klein’s nomination, a parliamentary procedure that allows any senator to keep a nominee from a floor vote.

Senatorial “holds” are …

May 26, 1997

Offsets complicate Boeing – McDonnell Douglas merger review

The aircraft market is not only a world market, but also a political market in which governments that buy military airplanes award contracts in part based on negotiated offsets job-creating facilities the winning contractor agrees to place in the country buying the airplanes.

And herein lies part of the genius of Boeings bid to merge with McDonnell Douglas, according to sources familiar with the FTCs investigation. If Boeing, with a backlog of civilian airplane orders, …

May 5, 1997

Klein nomination moving smoothly;
some unasked questions

Despite a decision late last month not to block the Bell Atlantic/Nynex merger Joel I. Kleins nomination for Assistant Attorney General of the Antitrust Division is not in jeopardy.

Several senators used Kleins April 29 nomination hearing before the Senate Judiciary Committee to vent frustration that the deal was allowed to proceed unchallenged. Sen. Patrick Leahy (D-Vt.) was the most emphatic, saying he was surprised and disappointed the deal was not blocked or modified. Leahy, however, …

April 7, 1997

How the FTC came to challenge Staples/Office Depot merger

On March 26, FTC Economics Bureau Director Jonathan B. Baker told the commissioners that he agreed with Competition Bureau Director William J. Baer: they should reject Staples proposed multibillion dollar acquisition of arch price-competitor Office Depot, FTC:WATCH has learned.

Although Staples had offered to divest to third competitor OfficeMax 63 office superstores located in markets where Staples and Office Depot were the only two competitors (plus stores in Los Angeles, a special case), Baker said …

March 24, 1997

Merger Watch: hell — you can fix anything

FTC Chairman Robert Pitofsky set Wall Street arbitrageurs hearts aflutter last week when he told a Reuters wire service reporter that it might be possible to fix Staples proposed acquisition of Office Depot so that it would avoid an antitrust challenge from the agency.

Its too early to celebrate.

Ever since Vista Chemical and RWE fixed a merger that had an anticompetitive overlap in a product (alumina) that is manufactured only as a by-product …

March 10, 1997

FTC to challenge Staples-Office Depot merger

The Commissioners voted 4-1 on March 10 to seek a preliminary injunction blocking the proposed merger of Staples and Office Depot.

Commissioner Mary L. Azcuenaga cast the dissenting vote, without comment, although it is understood that she did not find reason to believe that there is an office supply superstore market.

The Commissioners then voted 5-0 to put this case on a fast track litigation schedule, so that if it goes into administrative trial the agency …

February 24, 1997

Staples/Office Depot merger may head for a District Court shoot-out

According to the Boston Globe (February 18), Staples chairman and CEO Thomas Stemberg says his firm will contest the FTC vigorously if the agency tries to block Staples merger with Office Depot.

He may get his chance. There is now a very real possibility that the FTC will challenge the transaction, asking a federal district court to enter a preliminary injunction. The Commissioners have scheduled an unusual Saturday meeting (some may have to participate …

February 10, 1997

U.S. District Court Judge Harold H. Greene has ordered six music video producers to comply with civil investigative demands issue in an Antitrust Division investigation of alleged overseas price-fixing that may have erected obstacles to competing U.S. exporters of music video programming.

The targets of the investigation had refused to comply with those portions of the CIDs dealing with overseas activities, asserting that the Foreign Trade Antitrust Improvements Act bars the Antitrust Division from investigating their overseas activities because those activities dont spill …

January 13, 1997

FTC planning second set of competition hearings

The Federal Trade Commissioners are preparing to authorize a second set of public hearings on the challenges of global competition with emphasis on the law and economics of joint ventures, FTC:WATCH has learned.

The form the sessions may take may actually be less formal then the hearing format used in the October-December, 1995 program. According to sources, the sessions may be government-industry workshops or roundtables and will probably take place in April or May.

The …

April 21, 1997

Administrative adjudication revival

There was a time there, in the 1970s, when it was expected that the Magnuson-Moss FTC Improvements Act would lead to an end of consumer protection trials before FTC administrative law judges because the agency would be transformed into a trade regulation rule factory and do its enforcing in federal court.

Likewise, the Hart-Scott-Rodino Act, adopted in 1976, seemed likely to throw merger challenges into federal court, leaving only the occasional monopolization or, perhaps, Robinson-Patman Act case for administrative litigation.

…

January 27, 1997

Antitrust Division investigation of Mastercard & Visa
nears decision point

Lawyers for credit card associations Mastercard and Visa will visit Acting Assistant Attorney General Joel Klein and his staff during the last week of February to attempt to dissuade the Antitrust Division from filing antitrust charges against alleged exclusionary activities, FTC:WATCH has learned.

American Express has mostly failed so far to crack Mastercard and Visa rules which bar banks issuing those cards from issuing American Express products and has complained to the Antitrust Division. …