U.S. keeps losing antitrust court battles but few expect pullback

Aerojet Rocketdyne Holdings

04/10/2022 12:00

By Diane Bartz
       WASHINGTON, Oct 4 (Reuters) - The U.S. government has
been hit with four painful losses at antitrust trials recently
but legal experts do not expect the Biden administration's
regulators to slow efforts to make American business more
competitive.
    In fact, the Justice Department and Federal Trade Commission
(FTC) have vowed to press on aggressively. The top competition
lawyer at Justice, Jonathan Kanter, told lawmakers on Sept. 20
that "part of the job that we have before us is to litigate
cases and to take risks when it's appropriate and necessary to
defend the American public, particularly in areas such as
healthcare."
    "We are not going to back down from bringing meritorious
cases," he added.   
    The department has merger fights underway in industries like
airlines, publishing, national security and residential locks.
    FTC Chair Lina Khan, in the same hearing, noted the agency
had sued to block six mergers outright in the past year.
    "Congress has tasked us with stopping unlawful mergers," she
said in a statement to Reuters. "If we determine that a merger
would violate the law, we have a responsibility to act, and we
will not shrink from that duty."
    Recent losses "won't cause them to back down unless they get
blowback from a quarter that I don't know about," said Henry Su,
a former FTC official now at the law firm Bradley Arant Boult
Cummings LLP. 
        The U.S. Justice Department lost two merger fights last
month, failing to stop UnitedHealth Group's bid to buy Change
Healthcare and U.S. Sugar's deal for Imperial Sugar Co. Not long
before that, in July, a jury found chicken producer executives
innocent of price-fixing. 
        And a judge at the Federal Trade Commission ruled on
Sept. 1 against the agency's effort to stop Illumina's merger
with Grail. 
    Meanwhile companies have changed their behavior, structuring
deals to avoid accusations that they break antitrust law, and
preparing for court fights that would have been avoided in the
past by negotiations between the agency and companies to sell
assets or otherwise remedy competition concerns.
    "Anyone thinking about doing a merger that raises antitrust
concerns must either fix it before notifying the government or
go into the merger review ready to litigate," said Andre Barlow
of the law firm Doyle, Barlow & Mazard PLLC.
        "The days of cooperating with the antitrust agencies in
a merger review to work out a negotiated settlement may be gone.
The antitrust agencies are taking a litigation approach so the
merging parties must do the same," he said in an email.
        Cargill and Continental Grain did just that when their
joint venture acquired Sanderson Farms to combine it with Wayne
Farms, both chicken producers. Both Sanderson and Wayne had
plants in Laurel, Mississippi, but Wayne sold theirs shortly
after the deal was announced, raising a huge barrier to the
government challenging the deal. It closed in July 2022.
        All of this is not to say the Biden administration's
regulators have not had big successes.
        The FTC sued to stop U.S. arms maker Lockheed Martin
Corporation's  LMT.N  from buying rocket engine maker Aerojet
Rocketdyne Holdings Inc  AJRD.N  as well as chipmaker Nvidia
Corp's  NVDA.O  planned purchase of Arm Ltd. Both were
abandoned. 
    The FTC also filed complaints to block the mergers of big
healthcare companies in New Jersey, Rhode Island and Utah. All
were abandoned.
    The Justice Department has also had deals scrapped under
pressure, including in shipping containers, construction
materials and engineering.
    Still, William Kovacic, who teaches antitrust at the George
Washington University Law School, said continued losses would
hurt the agencies.
    "Ultimately to build your program, you need litigated
victories," he said. "There is some undefined critical mass of
victories you need to be credible."
 (Reporting by Diane Bartz; Editing by Josie Kao)
 ((Diane.Bartz@thomsonreuters.com; 1 202 898 8313;))