acquisition Archives - ANTITRUST ALERT

DOJ and Merging Parties Agree on Unprecedented Arbitration Procedure to Resolve Merger Challenge

by Anthony S. Ferrara, Gregory E. Heltzer and Noah Feldman Greene | Oct 11, 2019 | DOJ Developments, Mergers & Acquisitions

WHAT HAPPENED:

On September 4, 2019, the US Department of Justice’s Antitrust Division (DOJ) sued to block Novelis Inc.’s proposed $2.6 billion acquisition of Aleris Corporation.
DOJ alleged that the transaction would combine two of only four North American producers of aluminum auto body sheet (ABS). DOJ further alleged that Aleris was a new and disruptive rival supplier of aluminum ABS whose expansion into the North American market immediately impacted pricing.
Prior to DOJ’s suit to block the transaction, the merging parties and DOJ agreed that the dispute boiled down to a single dispositive issue: whether aluminum ABS constitutes a relevant product market, and specifically, whether the market for aluminum ABS also includes steel ABS.
DOJ and the merging parties agreed to refer this product market issue to arbitration pursuant to the Administrative Dispute Resolution Act of 1996 (5 U.S.C. § 571 et seq.) and the Antitrust Division’s implementing regulations (61 Fed. Reg. 36,896 (July 15, 1996).
In a filing in federal court the DOJ explained that it decided to arbitrate rather than litigate the merger in federal court because all sides agreed that the case turned on the single question of product market definition and referring the matter to arbitration would lessen the burden on the Court and reduce litigation costs to the merging parties and to the United States.

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Five Things To Know About German Merger Control

by Christian Krohs and McDermott Will & Emery | Sep 25, 2017 | EU Developments, German Developments, Mergers & Acquisitions

As reported previously, German competition law was recently amended. The amendments included with the introduction of a “size of transaction”-threshold a notable change with respect to German merger control. The following is a reminder of five important features of German merger control which you should be aware of:

The jurisdictional thresholds of German merger control are easily triggered

German merger control applies if the parties to a transaction (usually the acquirer and the target) exceeded, in the last financial year, certain turnover thresholds. In an international context, these thresholds are relatively low and easily triggered:

Joint worldwide turnover of all parties > € 500 million, and
German turnover of at least one party > € 25 million, and
German turnover of another party > € 5 million.

There is a new “size of transaction”-threshold

Since June 2017, German merger control can also be triggered if a newly introduced “size of transaction”-threshold is exceeded:

Joint worldwide turnover of all parties > € 500 million, and
German turnover of at least one party > € 25 million, and
“value of compensation” > € 400 million, and
The target company has “significant business activities” in Germany (which may be activities with revenues < € 5 million).

The “value of compensation” includes the purchase price and all other assets and non-cash benefits, as well as liabilities assumed by the purchaser.

Acquisition of minority shareholdings may be notifiable

Similar to the HSR Act, but different to European Union merger control and most European jurisdictions, German merger control is not limited to the “acquisition of control”. Additional triggering events are

The acquisition of 25% or more of the shares in a company, and
The acquisition of a shareholding below 25% if this, combined with other factors (e.g. the right to appoint one out of five members of the board), may have an impact on competition (“acquisition of ability to exercise competitively significant influence”).

Review of joint venture situations

German merger control may apply in joint venture situations that are often not covered by other merger control laws:

German merger control may apply to the setting up of a joint venture company, even if the joint venture will have no activities in Germany. The jurisdictional thresholds may be satisfied by the parent companies alone. While there is an exemption for transactions with “no effect in Germany”, it is interpreted very narrowly and applies only in exceptional circumstances.
German merger control applies to all joint venture situations where two or more parties acquire or continue to hold a shareholding of 25% or more. Examples:
– A and B set up a 50/50 production joint venture.
– A acquires sole control and a 70% shareholding, and B acquires a non-controlling 30% shareholding.
– A sells 75% of a fully owned subsidiary to B, and retains only a 25% minority shareholding.
– A, B and C each own 1/3 in a joint venture company. C divests his shareholding [...]

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European Commission Approves Microsoft Acquisition of LinkedIn Subject to Conditions

by McDermott Will & Emery | May 16, 2017 | EC Developments, Mergers & Acquisitions

On 6 December 2016, the European Commission cleared the acquisition of LinkedIn by Microsoft, subject to Microsoft granting LinkedIn’s competitors access to certain LinkedIn tools.

“BIG DATA” CONCERNS ANALYSED AND DISMISSED

The acquisition of LinkedIn’s “data” was one of the most anticipated issues in the case. Following Facebook/WhatsApp and Google/Doubleclick, Competition Commissioner Vestager highlighted the problem of “big data” in a 2016 speech, noting that “The problem for competition isn’t just that one company holds a lot of data. The problem comes if that data is really unique, and can’t be duplicated by anyone else.” As an overall matter, Microsoft’s and LinkedIn’s activities only overlapped in the provision of non-search online advertising services.

The Commission considered two ways in which combining the parties’ respective datasets relating to online advertising could harm competition. First, combining datasets can increase the parties’ market power in the supply of data, or increase barriers to entry for actual or potential competitors that need the data to compete, thus reducing competition. Second, even if the parties do not intend to combine their datasets post-merger, concerns can still arise if the datasets were the basis for competition between them pre-merger, and the transaction removed this competitive dynamic. The Commission dismissed these concerns, noting that Microsoft and LinkedIn had a limited presence in online advertising, did not compete closely and did not make their data available to third parties for advertising purposes. (more…)

FTC Consent Agreement with Par Petroleum Demonstrates Increased Agency Focus on Competitive Effects

by Emily Townsend | Mar 29, 2015 | FTC Developments, Joint Ventures/Competitor Collaboration, Mergers & Acquisitions

On March 18, 2015, the Federal Trade Commission (FTC) ordered Par Petroleum Corporation to terminate its storage and throughput rights at a key gasoline terminal in Hawaii. This action will settle FTC charges seeking to prevent Par’s acquisition of Koko’oha Investments, Inc. Notably, the market structure created as a result of this remedy mirrors a market structure that was deemed anticompetitive in a 2005 FTC action. The two differing approaches to the same market highlight a key trend in the FTC’s merger enforcement: the focus on competitive effects of a transaction, as opposed to the resulting market structure.

The Market for Hawaii-Grade Gasoline Blendstock

The allegedly anticompetitive transaction affects the market for Hawaii-grade gasoline blendstock. Gasoline blendstock is produced by refining crude oil and is later combined with ethanol to make finished gasoline. The finished gasoline is sold to Hawaiian consumers.

Prior to the transaction, there were four competitors in the market for Hawaii-grade gasoline blendstock. Par and another oil company competed by operating refineries and producing the blendstock on the Hawaiian Islands. The other two competitors, Mid Pac Petroleum, LLC, and Aloha Petroleum, Ltd., competed by sharing access to the only commercial gasoline terminal on the Islands not owned by a refinery and capable of receiving full waterborne shipments of gasoline blendstock. This terminal, the Barbers Point Terminal, was owned by Aloha, but Mid Pac shared access through a long-term storage and throughput agreement.

The two oil refiners produced more gasoline than was consumed in Hawaii. As a result, importing gasoline blendstock was unnecessary. However, Mid Pac and Aloha were able to constrain the price of gasoline blendstock purchased from the Hawaiian refiners by maintaining their ability to import gasoline blendstock through the Barbers Point Terminal.

The Proposed Transaction and the FTC Challenge

On June 2, 2014, Par agreed to acquire Koko’oha for $107 million. As part of this transaction, Par would acquire Koko’oha’s 100 percent membership interest in Mid Pac and, therefore, Mid Pac’s rights to access the Barbers Point Terminal. The FTC filed a complaint alleging this transaction was likely to substantially lessen competition in the bulk supply of Hawaii-grade gasoline blendstock.

The basis of the FTC’s action was that “[t]he Acquisition would weaken the threat of imports as a constraint on local refiners’ [gasoline blendstock] prices.” By acquiring Mid Pac’s throughput and storage rights at Barbers Point Terminal, Par would have an incentive to use those rights strategically to weaken Aloha’s ability to constrain the price of gasoline blendstock. The specific competitive concern the FTC cited was that Par would store substantial amounts of gasoline in the Barbers Point Terminal for extended periods of time. By doing so, Par would tie up the capacity at the terminal and thereby reduce the size of import shipment that Aloha could receive at the terminal. “This would force Aloha to spread substantial fixed freight costs over a smaller number of barrels of gasoline, which would significantly increase its cost-per-barrel of importing.”

On March 18, 2015, the FTC and Par [...]

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DOJ and Merging Parties Agree on Unprecedented Arbitration Procedure to Resolve Merger Challenge

Five Things To Know About German Merger Control

European Commission Approves Microsoft Acquisition of LinkedIn Subject to Conditions

FTC Consent Agreement with Par Petroleum Demonstrates Increased Agency Focus on Competitive Effects

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