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Legislation to ease antitrust reviews of mergers has now cleared key committees in both chambers of Congress but enactment this year is far from assured. The House Judiciary Committee last week passed a bill that would raise the threshold for review to deals valued at more than $50 million. The Hart-Scott-Rodino Act now covers deals of more than $15 million. The House bill also would impose higher fees on big deals. Transactions valued at more than $500 million would pay $250,000, and those between $100 million and $500 million would pay $125,000. Deals valued between $50 million and $100 million would continue to pay $45,000. The Senate Judiciary Committee passed a nearly identical bill in the spring. But it has sat on the Senate floor for months, waiting to be brought up for a vote. A spokeswoman for Sen. Mike DeWine, R-Ohio, said it has not been scheduled for a vote. That could spell trouble. When lawmakers return in September from the summer recess, attention will turn quickly to passing the appropriation bills so members may return home to campaign. HSR reform could well get lost in the process. The Office of Thrift Supervision wants to make it more difficult for financial firms to acquire thrifts that recently converted from mutual ownership to stock ownership. In a proposal issued last week, the agency said it would start strictly enforcing a rule that bars such deals until three years after a thrift converts from being owned by depositors to being owned by stock holders. The agency had been granting waivers. The OTS proposal did include some good news for acquisitive thrifts. It said a mutual thrift holding company — an entity created when a mutual thrift sells less than a controlling stake in the institution to the public — is entitled to issue new shares to buy another financial company. However, these new shares, combined with the other shares that trade publicly, may not exceed 50 percent of outstanding stock. Senate Banking Committee Chairman Phil Gramm made progress last week on his promise to cut by 75 percent fees charged by the Securities and Exchange Commission on mergers. Gramm’s bill passed his committee on a voice vote last week after the Texas Republican killed efforts to attach privacy legislation to it. The fee cut, which is co-sponsored by Sen. Charles Schumer, D-N.Y., and supported by SEC Chairman Arthur Levitt, would reduce levies as of Oct. 1 to $67 for each $1 million in either compensation paid in tender offers or in value of new securities being registered. The fees would then fall to $33 per $1 million in fiscal year 2007 and beyond. Fees currently are $264 per $1 million of transaction value. “With this vote, we have started the process of repealing one of the most inefficient taxes a society could impose on its members,” Gramm said. “Under the current fees collected on securities, we are collecting more than four times as much as we need to run the SEC. These fees represent a tax that is basically taking money away from every investor who is trying to accumulate wealth . …” U.S. antitrust regulators finally seem willing to give an international body at least some role in setting competition policy. At the American Bar Association convention last week, Assistant Attorney General Joel Klein said that an often-made proposal to empower the Organization for Economic Cooperation and Development to address competition policy deserves “very serious discussion.” Just a few weeks earlier, Federal Trade Commission Chairman Robert Pitofsky endorsed a European Commission plan to give the World Trade Organization a role in establishing best practices and in training antitrust authorities in developing countries. Both ideas represent major concessions. U.S. regulators had steadfastly opposed giving a multinational organization any say over competition policy. Yet the increasingly global nature of mergers and a growing convergence among foreign and U.S. competition policies appears to be eroding that opposition. Still, U.S. regulators are not even close to approving an international antitrust body with teeth, such as a group that would review cross-border mergers and set uniform pre-merger notification policies. That would just be too radical for now. Visa USA Inc. has not been shy about blaming American Express Corp. for inciting the government to file antitrust charges against the credit-card giant. But the former government official who initiated the case said such criticism is unwarranted. Anne Bingham, President Clinton’s first assistant attorney general for antitrust, told the American Bar Association last week that she initiated the investigation after receiving a call from Bill Baxter, who held her antitrust post during the Reagan administration. Bingham said that Baxter called her to complain that the Justice Department never should have approved a plan allowing banks to issue both Visa and MasterCard products. That policy, known as duality, is the focus of a current trial in New York. Two prominent antitrust lawyers said that Baxter’s clients at the time did not include American Express. They added that Visa’s campaign blaming American Express for its troubles is unfair. Baxter is deceased, so there is no way to confirm Bingham’s account. A Visa official questioned whether Baxter would have made the call because he was then a paid consultant for the credit-card concern. The official also noted that, although Baxter did not support the initial decision to allow a bank to issue both MasterCard and Visa products, he had repeatedly written that it was too late to undo duality. Finally, there is some question as to whether Bingham is really the parent of the case. Her successor, Joel Klein, is typically credited with invigorating the investigation that led to the antitrust charges. B2B EXCHANGES BETTER KEEP AN EYE ON THE FEDERAL TRADE COMMISSION Agency general counsel Debra Valentine said last week at the American Bar Association convention in New York that B2B exchanges also could provide a means for companies to collude to inflate prices. The risk is greatest for high-value, unique products, where it is harder to shop around for other suppliers. Valentine also said so-called “bid and buy” systems raise fewer antitrust issues than systems that allow bidders to alter their prices. Copyright �2000 TDD, LLC. All rights reserved.

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