The Federal Trade Commission ("FTC") and Department of
Justice ("DOJ") have released their annual
Hart-Scott-Rodino ("HSR") Report, which details the
agencies' merger review and enforcement for fiscal year 2014,
which runs from October 1, 2013, to September 30, 2014. This
provides data and useful insights into the agencies' pre-merger
review program.
Merger filings continue to grow, approaching pre-recession levels.
During the 2014 fiscal year, 1,663 transactions were reported to
the federal antitrust agencies through the HSR premerger
notification program. This is a 25% increase over fiscal year 2013
and is the highest number of filings since 2008.
"Mega-mergers" increase. The percentage of reportable
merger transactions valued at more than $500 million also has
increased over the past three years. During the 2014 fiscal year,
nearly one-third of HSR-reportable mergers were valued at over $500
million.
Second Requests flat. Despite fluctuations in the number of
HSR-reportable transactions, the percentage of transactions
resulting in a request for additional information (known as a
Second Request) has not varied substantially, ranging from 2.5% to
4.5% for both agencies combined. During the 2014 fiscal year, the
agencies issued Second Requests in 51 merger investigations,
representing 3.2% of all filings.
Government challenged more than 30 transactions. The agencies
together challenged 33 transactions during the fiscal year. The FTC
brought 17 challenges, including 13 in which it accepted consent
orders for public comment, all of which resulted in final orders,
three in which the transactions were abandoned or restructured in
the face of FTC's antitrust concerns, and one in which
administrative litigation was initiated. The DOJ challenged 16
transactions; in seven, the DOJ filed settlement papers
simultaneously with the complaint. Of the remaining nine
transactions in which the DOJ did not file a complaint, the parties
abandoned the transaction in four instances and restructured the
transaction to resolve the DOJ's concerns in five
instances.
Focus on markets where consumer spending is high, including
healthcare. Nearly one-third of notified transactions during the
2014 fiscal year involved the purchase of a company in the consumer
goods and services sector. Therefore it is no surprise that several
of the agencies' enforcement actions also fell into this
category. For example, the DOJ challenged Tyson Foods's
proposed acquisition of The Hillshire Brands Co. The companies
compete in the procurement of sows from U.S. farmers for slaughter
and processing into pork sausage. A proposed consent decree was
filed simultaneously with the complaint and required Tyson to
divest its sow purchasing business to avoid a challenge to the
acquisition.
Healthcare and pharmaceuticals sectors continue to be areas of
focus for the agencies. Although healthcare and pharmaceuticals
comprised only 4.1% of reported transactions, these sectors
resulted in some of the antitrust agencies' most high profile
enforcement actions. For example, in April 2015, the FTC concluded
its challenge of St. Luke's Health System's acquisition of
Saltzer Medical Group, which combined Idaho's largest health
system and its largest independent, multi-specialty physician
practice group. The FTC and the Idaho Attorney General challenged
the transaction in federal court. The U.S. District Court for the
District of Idaho found that the acquisition violated Section 7 of
the Clayton Act and the Idaho Competition Act, permanently enjoined
the consummated acquisition, and ordered St. Luke's to divest
Saltzer's physicians and assets. The Ninth Circuit
affirmed.
Conclusion
These data show that, as the volume of transactions approaches
pre-recession levels, the FTC and DOJ continue to enforce the
antitrust laws aggressively. In particular, the agencies will look
most closely at cases involving consumer goods and health care
because those industries most directly implicate consumer
spending.
The HSR Report can be found on the FTC's website.
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