The Federal Trade Commission ("FTC" or "the Commission") and Antitrust Division of the Department of Justice ("DoJ") recently released their combined annual report focused on merger enforcement, the Hart-Scott-Rodino Annual Report, Fiscal Year 2009.1 The report provides a numbers-based summary of what occurred at each agency during the year and is a helpful indicator of trends. Although there were fewer mergers reported to the agencies in fiscal year 2009 than in years past, the agencies are reportedly busy. For example, while the number of transactions reported to the agencies decreased from 1,726 in fiscal year 2008 to 716 in 2009, the number of second requests issued was slightly higher. Fewer transactions receiving more attention could mean the agencies have been presented with more strategic transactions than in years past, as well as indicate a developing enforcement policy.
Highlights from the report include:
- Number of Transactions: The agencies report reviewing far fewer transactions this year compared to last year, specifically, and previous years, generally. The number of transactions reported in fiscal year 2009 decreased 59% from the number of transactions reported in fiscal year 2008. In fiscal year 2009, 716 transactions were reported to the agencies, while 1,726 were reported in fiscal year 2008. (Note, a "transaction" does not refer to separate mergers or acquisitions; a particular merger, joint venture or acquisition may be structured such that it involves more than one transaction.)
- Percentage Receiving Second Requests: The percentage of transactions resulting in second requests increased, from 2.5% in fiscal year 2008 to 4.5% in fiscal year 2009.
- FTC Highlights: In fiscal year 2009, the Commission challenged 19 transactions. The Commission was successful in all 19: in ten, the Commission obtained a consent decree; in eight cases the parties abandoned the deal either after the Commission authorized staff to seek a preliminary injunction (five cases) or after learning of the Commission's concerns; there is one challenge pending in federal court where the Commission is seeking a permanent injunction.
- FTC Notable Challenges: The Commission obtained a preliminary injunction blocking the proposed $1.4 billion merger of CCC Information Services and Mitchell International. It also challenged CSL Limited's proposed $3.1 billion acquisition of Talecris Biotherapeutics (market of plasma-derivative protein therapies). In addition, the Commission challenged the consummated purchase by Ovation Pharmaceuticals of the right to the drug NeoProfen (on August 31, 2010, a federal district court in Minnesota dismissed the FTC's case following trial; the FTC has until November 1, 2010 to appeal the district court's decision).
- DoJ Highlights: The Antitrust Division challenged 12 transactions, resulting in six consent decrees, one transaction abandoned after DoJ's complaint was filed, and five transactions that were abandoned or restructured after the Division informed the parties of its concerns.
- DoJ Notable Challenges: The Antitrust Division sued to block the proposed acquisition of National Beef Packing, the fourth-largest beef packer, by JBS, the third-largest U.S. beef packer, and the parties subsequently abandoned the transaction. Also, the Division challenged the consummated combination of Microsemi Corporation and Semicoa, Inc., which resulted in a consent decree requiring Microsemi to divest all assets it acquired from Semicoa.
- HSR Compliance: The Commission and Antitrust Division monitor compliance with the premerger notification program's filing and waiting period requirements and initiated a number of compliance investigations in fiscal year 2009. During fiscal year 2009, the agencies brought two enforcement actions, resulting in $2.2 million in civil penalties. (Sources for compliance investigations include competitors and suppliers, as well as a review of newspapers and industry publications for announcements of transactions.)
- Industry Groups Receiving Attention: Merger enforcement was generally spread evenly throughout industry groups. The following is the percentage of reportable transactions that received merger enforcement attention in each industry: health services, 3.5%; chemicals & pharmaceuticals, 6.1%; transportation, 3.9%; consumer goods & services, 15.2%; banking and insurance, 12%; manufacturing, 7.9%; information technology, 8.2%; energy & natural resources, 8.8%; and "other" 33.5% (the "other" category consists of industry segments that include construction, educational services, performing arts, and non-classifiable establishments).
For more information about the complex rules regarding premerger filing notifications, see the Kelley Drye resource, Premerger Antitrust Requirements: The 2010 Hart-Scott-Rodino Premerger Notification Sourcebook, available online.