Corporate Practice Series Portfolio No. 56-3rd, Antitrust Aspects of Mergers and Acquisitions, discusses the antitrust analysis of mergers and acquisitions, particularly under §7 of the Clayton Act, the primary federal antitrust statute relating to business consolidations. The portfolio presents an overview of §7’s history and application with special emphasis on recent decisions, interpretations, and guidelines. The portfolio also discusses mergers in the context of §§1 and 2 of the Sherman Act and §5 of the Federal Trade Commission Act.

Portfolio 56-3rd: Antitrust Aspects of Mergers and Acquisitions

I. Introduction and Overview
   A. Subject and Scope of the Portfolio
      1. Introduction
      2. Section 7 of the Clayton Act
   B. Types of Mergers
      1. Horizontal Mergers
      2. Vertical Mergers
      3. Conglomerate Mergers
   C. Merger Enforcement Through the Years

II. Legislative History of §7 of the Clayton Act
   A. Introduction
   B. The Original Clayton Act
   C. The 1950 Amendments
      1. Asset Acquisitions
      2. Amendments to the Standard of Legality
   D. The 1980 Amendments
   E. Conclusion

III. Jurisdictional and Other Preliminary Issues
   A. Introduction
   B. The Interstate Commerce Requirement
   C. Section 7 of the Clayton Act
      1. “Acquire” and “Asset”
      2. FTC Jurisdiction
      3. Exemptions
        a. Acquisitions Solely for Investment
        b. Subsidiaries
        c. Regulated Industries
   D. Section 1 of the Sherman Act
   E. Section 2 of the Sherman Act
   F. Section 5 of the FTC Act
   G. State Antitrust Laws

IV. Substantive Analysis
   A. Introduction
   B. Government Merger Guidelines
   C. Relevant Markets
      1. Relevant Product Market
        a. Submarkets
        b. Cluster Markets
        c. The 1992 Merger Guidelines
        d. The 1993 NAAG Merger Guidelines
     2. Relevant Geographic Market
        a. In General
        b. The 1992 Merger Guidelines
        c. The 1993 NAAG Merger Guidelines

V. Horizontal Mergers
   A. Introduction
   B. Market Definition and Measuring Market Share and Market Concentration
   C. Assessing Competitive Effect
      1. Effect on Concentration
      2. Relevant Factors
        a. Historical Evidence and Natural Experiments
        b. Anecdotal Evidence
        c. Entry
        d. Efficiencies
        e. Price Elasticity of Demand
        f. Product Homogeneity
        g. The Size, Distribution, and Sophistication of Purchasers
        h. History of Collusion in the Market or Industry
        i. Transaction Characteristics
        j. Excess Capacity in the Market
        k. Rapidly Changing Technology
        l. Financial Weakness
        m. Increased Ability to Compete Against Larger Firms
        n. Other Factors
   D. The Merger Guidelines and Competitive Effects
      1. Unilateral Conduct
        a. Differentiated Products
        b. Products for Which Prices Are Set by Negotiation or Auction
        c. Undifferentiated Products, Where Output Suppression Is Involved
        d. Curtailment of Innovation or Product Variety
      2. Coordinated Interaction
      3. Effects on Targeted Customers
   E. Special Cases
      1. Mergers of Competing Buyers
      2. Partial Acquisitions
   F. Defenses
      1. Failing Company 281
      2. Failing Division
      3. State Action and Implied Repeal

VI. Non-Horizontal Mergers and Joint Ventures
   A. Vertical Mergers
      1. Introduction
      2. Assessing Competitive Effects
   B. Conglomerate Mergers
      1. Introduction
      2. The Elimination of Potential Competition
        a. Perceived-Potential Competition
        b. Actual-Potential Competition
      3. Entrenchment 81
      4. Reciprocal Dealing 96
   C. Joint Ventures

VII. Litigation and Relief
   A. Introduction
   B. Liaison and Clearance
   C. Preliminary Relief
      1. Actions by the Department of Justice
      2. Actions by the FTC
      3. Actions by Private Parties
      4. Forms of Preliminary Relief
        a. Preliminary Injunction Prohibiting the Acquisition
        b. Hold-Separate Orders
        c. Rescission
   D. Permanent Relief
      1. Injunctive Relief
      2. Divestiture
        a. Divestiture in Government Cases
        b. Divestiture in Private Actions
      3. Rescission
      4. Reporting Requirements
      5. Ancillary and Conduct Relief
      6. Prior Approval and Notification Requirements
   E. Private Enforcement of §7—Standing and Antitrust Injury
      1. Antitrust Injury in Claims for Damages—Clayton Act §4
        a. Generally
        b. Standing, Injury, and Antitrust Injury
      2. Antitrust Injury in Claims for Injunctive Relief—Clayton Act §16
   F. Miscellaneous Issues
      1. Time-of-Suit-Doctrine
      2. Post-Acquisition Evidence 207
      3. Voluntary Divestiture During Investigation
      4. Amended Merger Agreements and Other Structural Self-Help

VIII. Pre-Merger Notification
. Introductory Material
   A. Applicability
      1. General Rules
      2. Exemptions
   B. Notification and Report Forms
   C. Waiting Period
   D. Request for Early Termination
   E. Request for Additional Information
   F. Computation of Time
   G. Penalties for Failure to Comply
   H. Preliminary Injunctions
   I. Confidentiality 

Portfolio 56-3rd: Antitrust Aspects of Mergers and Acquisitions

Wks. 1 Sherman Act, 15 U.S.C. §§1 and 2

Wks. 2 Clayton Act, 15 U.S.C. §§18, 18a, and 21(a)

Wks. 3 Federal Trade Commission Act, 15 U.S.C. §§44 and 45

Wks. 4 National Cooperative Research Act, 15 U.S.C. §§4301–4306

Wks. 5 U.S. Department of Justice and the Federal Trade Commission Horizontal Merger Guidelines Issued: August 19, 2010

Wks. 5A U.S. Department of Justice and the Federal Trade Commission Horizontal Merger Guidelines (1992, amended in 1977)

Wks. 6 U.S. Department of Justice, Merger Guidelines (1984)

Wks. 7 U.S. Department of Justice & Federal Trade Commission, Antitrust Guidelines for Collaborations Among Competitors (2000)

Wks. 8 Statement of the Federal Trade Commission's Bureau of Competition on Negotiating Merger Remedies (2003)

Wks. 9 Federal Trade Commission Policy Statement on Monetary Equitable Remedies in Competition Cases (2003)

Wks. 10 Protocol for Coordination in Merger Investigations Between the Federal Enforcement Agencies and State Attorneys General (1998)

Wks. 11 Antitrust Division Policy Guide to Merger Remedies (2004)

Wks. 11A Commentary on the Horizontal Merger Guidelines

Wks. 12 National Association of Attorneys General, Horizontal Merger Guidelines (1993)

Wks. 13 National Association of Attorneys General, Voluntary Pre-Merger Disclosure Compact (1994)

Wks. 14 U.S. Department of Justice, Business Review Procedure

Wks. 15 Federal Trade Commission, Advisory Opinions

Wks. 16 Antitrust Improvements Act (Hart-Scott-Rodino) Notification and Report Form for Certain Mergers and Acquisitions 

Bevin M.B. Newman
Jones Day
Washington, D.C. 

P hillip A. Proger
Jones Day
Washington, D.C.  

Gary P. Zanfagna
Honeywell International, Inc.
Morristown, New Jersey