U.S. Antitrust Agencies Increase Merger Scrutiny: Challenge Small, and Even Consummated, Mergers
Over the past two years, U.S. antitrust agencies have challenged several mergers that fell well below the $63.4 million Hart-Scott-Rodino reporting threshold. While the U.S. Department of Justice’s Antitrust Division and the Federal Trade Commission always have had the power to challenge such transactions, the agencies have exercised that power more frequently in recent years. Experts attribute the rise in challenges to the slow merger market, improved monitoring capabilities, and a more aggressive enforcement position by the agencies in general.
Similarly, in recent months, the FTC has increased its challenges of consummated mergers, including ordering companies to unravel already combined companies from past mergers that it deemed anticompetitive. Since that start of the 2009 fiscal year, the FTC has challenged seven consummated transactions. In contrast, the FTC averaged one such challenge a year during the previous five years.
Former CEO Found Guilty of Conspiracy to Obstruct Justice
On July 27, 2010, a federal jury found Ian Norris, the ex-CEO of Morgan Crucible Co. PLC, a United Kingdom corporation, guilty of conspiring to obstruct justice during a grand jury investigation of price-fixing charges. According to a DOJ press release, the count carries a maximum penalty of five years in prison and a $250,000 fine. Although Norris was indicted on one count of price fixing, along with three obstruction-related counts, he was not tried for price fixing. In 2007, the British House of Lords ruled that Norris could not be extradited on the price-fixing count alone because the conduct alleged in connection with that count did not amount to a crime under U.K. law at the time it allegedly was committed. U.S. prosecutors pursued the conspiracy and obstruction counts, however, and the U.K. Supreme Court ultimately agreed that Norris could be extradited on those charges.
Draft Regulations Show China Getting Tougher on Price Fixing
China’s National Development and Reform Commission has released for public comment new draft regulations—called the “Special Regulations on Penalties for Unlawful Practices Committed during the Periods of Abnormal Fluctuation of Market Price”—that will give the NDRC the power to respond quickly to suspected price fixing. Among other things, the regulations would allow the NDRC to fine individuals for antitrust violations. Under China’s current law, only businesses can be fined. Other provisions of the draft regulations would allow the NDRC to confiscate illegal profits and, in serious cases, the NDRC would have the power to revoke a company’s business license, without which a company cannot trade legally in China.
ESA Finds Abusive Exclusivity Agreements and Imposes First Competition Law Fine
On July 14, 2010, the EFTA Surveillance Authority, the equivalent of the European Commission for Norway, Iceland and Liechtenstein, handed down its first ever competition law fine. The case serves as a reminder that a network of exclusivity agreements can give rise to abuse of dominant position charges. Additional information is available in our August 2010 EU/UK Competition Law Newsletter.