U.S. antitrust enforcers are proposing new guidelines for determining whether to approve mergers that combine companies that don’t compete with one another but operate in the same supply chain.
The Justice Department and the Federal Trade Commission announced criteria for how they would evaluate so-called vertical mergers in the future. If finalized, the guidelines would replace rules that haven’t formally been updated since 1984 despite new thinking about how such deals affect competition.
The proposal marks a move by the two agencies to clarify their approach to assessing potential competitive harm from vertical deals. Those mergers had long been seen as mostly benign until 2017, when the Justice Department surprised the antitrust world by suing to block AT&T Inc.’s takeover of Time Warner Inc., a case the government ultimately lost.
While the lawsuit was an aggressive move, it was criticized by some who said it was driven by President Donald Trump’s animus toward CNN, which was part of Time Warner. The Justice Department has long denied that there were any political considerations in the case.
“The revised draft guidelines are based on new economic understandings and the agencies’ experience over the past several decades and better reflect the agencies’ actual practice in evaluating proposed vertical mergers,” the Justice Department’s antitrust chief, Makan Delrahim, said in a statement. Once finalized, they will provide “more clarity and transparency,” he added.
Vertical deals were typically approved because unlike traditional mergers between companies that compete -- so-called horizontal deals -- they don’t eliminate a competitor in the market, so there’s less risk for higher prices from a more consolidated market. In theory, a vertical deal can make a company more efficient by giving it cost advantages over rivals, and those lower costs can be passed on to customers in the form of lower prices.
But lawyers and economists also point out that vertical deals can threaten competition by giving a company the power to raise the operating costs of its rivals. In the Time Warner case, for example, the Justice Department argued that AT&T would have the incentive and ability to charge higher rates for Time Warner programming sold to other pay-TV companies that compete with AT&T’s DirecTV unit.
The new guidelines explain that a vertical deal can harm rivals in just this way. It can also give the combined company access to sensitive business information about its rivals that it wouldn’t have been able to get before the merger, according to the proposal.
“Challenging anticompetitive vertical mergers is essential to vigorous enforcement,” FTC Chairman Joe Simons said. “The agencies’ vertical merger policy has evolved substantially” since 1984, “and our guidelines should reflect the current enforcement approach.”
Democrats Differ
The proposal drew criticism from the two Democratic commissioners on the FTC, Rebecca Kelly Slaughter and Rohit Chopra. They wrote that they supported rescinding the old guidelines but that the new ones don’t go far enough. Slaughter’s biggest concern is that the draft says enforcers are unlikely to challenge mergers where the companies have a market share of less than 20%.
“The draft guidelines do not account for all of the ways that existing dominance can be used to choke off market entry or distort competition,” Chopra said. “The nature of competition for capital, the new norms created by technological advancement, and the business incentives associated with data require a broader assessment of market power.”
When approving vertical takeovers in the past, U.S. enforcers routinely imposed conditions on how companies operate. Those so-called behavioral fixes came under fire by Delrahim right before he sued AT&T. He argued that they require enforcers to become regulators who need to monitor compliance with the agreements.
They’re also criticized for not working. In December, the Justice Department reached a settlement with Live Nation Entertainment Inc. after finding it violated behavioral conditions imposed on the company when it bought Ticketmaster in 2010.
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e le dijo a Wells Fargo & Co. que pagara $ 102.8 millones después de que un jurado federal en Texas dijera que infringió las patentes de la United Services Automobile Association para un sistema de depósito móvil.
Es el segundo juicio que Wells Fargo ha perdido contra USAA. En noviembre, otro jurado de Texas dijo que el banco debería pagar $ 200 millones por infringir otras dos patentes. Eso eleva el total a aproximadamente $ 303 millones adeudados por Wells Fargo, con sede en San Francisco. Wells Fargo dijo que "está totalmente en desacuerdo" con el veredicto y dijo que está considerando su opción, incluida una posible apelación.
(Published by Bloomberg, January 13, 2020)
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