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President Bush’s antitrust team appears to be largely upholding the enforcement regime of its predecessors, though there are indications of policy shifts that would favor merging companies. Although it is still early in the tenure of Federal Trade Commission Chairman Timothy J. Muris and Assistant Attorney General Charles James, antitrust lawyers generally agree with the regulators’ assertion they differ only at the margins from the Clinton administration. The biggest change to date is a willingness, especially at the FTC, to enter complicated consent decrees aimed at allowing companies to close their deals. Former FTC Chairman Robert Pitofsky was leery of complex agreements, believing them difficult to enforce. He preferred a company to identify and sell assets that pose anti-competitive problems before closing the merger, often a time-consuming process. But the FTC appears ready to accept a complicated agreement that would permit Chevron Corp. to acquire Texaco Inc. without Texaco first unloading its share of a joint venture with Shell Oil Co. Texaco has been trying for months to sell its stake to Shell, but the oil companies disagree on terms. Rather than hold up the merger indefinitely, the FTC appears ready to let Texaco place its share of the venture into a trust. The trustee would then be responsible for working out an eventual sale of the asset. Such an approach would be a departure from the Pitofsky regime. After all, the FTC held up the merger of Dow Chemical Co. and Union Carbide Corp. for a year because they could not find a buyer for one of the businesses that needed to be divested. The FTC entered a consent similar to the anticipated Texaco decree just a week after Muris was sworn in as chairman. Lafarge SA and Blue Circle Industries both participate in the U.S. cement market via rival joint ventures. The FTC approved their merger based on the prospective unwinding of these ventures. If that does not occur within 180 days, the FTC would appoint a trustee to sell the businesses. Neither the oil nor the cement industry merger represents a radical departure from prior policies. The Pitofsky regime did accept a complex decree in the AOL-Time Warner Inc. deal. Also, one former regulator said agency lawyers were already questioning whether the Dow-Union Carbide approach was the best way to preserve competition. Still, in each case the FTC appears to be siding in favor of getting the deal done. The PepsiCo-Quaker Oats Co. transaction also suggests that antitrust policy is now tilted toward getting deals done. FTC commissioners deadlocked 2-2 on whether to challenge the transaction and Pepsi was allowed to complete the deal without restrictions. Muris did not participate in the vote, which was split along party lines. Yet even this deal appears to be at the margins. Several antitrust lawyers argued that the Pepsi deal involved a unique set of facts and presented the agency with a particularly difficult enforcement decision. This included a reluctance to commit the agency to major litigation without the involvement of Muris, who was recused because of work he did for Pepsi. Also, the case involved a charge of “potential competition,” which holds that the prospects of a new company entering a market could restrain prices. The theory has rarely been tested in the courts and could have resulted in a blow to enforcement efforts if rejected by a judge. Lawyers also contend that all five FTC commissioners could have declined to challenge the deal if Pitofsky still served as chairman. That is because the case reportedly presented little evidence suggesting Quaker planned to compete in the broader soft drink market, they said. Although these three transactions could suggest a laxer enforcement attitude, there is plenty of competing evidence that the agencies remain in fighting mode. Since June, antitrust enforcers have: � Derailed UAL Corp.’s proposed $11 billion acquisition of U.S. Airways Group Inc. by threatening to challenge the deal on antitrust grounds; � Asked a federal appeals court to expedite its handling of the Microsoft Corp. appeal so proceedings can begin on how it should be punished for violating antitrust laws; � Sued to block 3D Systems Corp.’s $45 million acquisition of DTM Corp. because it could result in higher prices and less innovation for a process used to transform a computer design into a three-dimensional object; � Issued a second request Monday for more details on TMP Worldwide Inc.’s acquisition of HotJobs.com Ltd., a rare instance where a dot-com merger has been subject to review. Entry in the Internet market had been considered so easy that mergers posed little competitive threat; � Required divestitures in seven mergers and brought other types of antitrust charges in four additional cases. Most of the action has occurred at the DOJ, where James was not confirmed by the Senate until June 15, though he had a senior deputy in place for much of the spring. The department has brought 11 of the 12 cases so far. That the status quo holds more at the DOJ is not surprising; it never adopted some of Pitofsky’s views that caused such concern among antitrust lawyers. Though the FTC is challenging fewer deals, Muris has warned companies not to expect lenient treatment just because a Republican occupies the White House. “I know that some in the press and the bar think that the Bush administration will relax antitrust enforcement,” Muris recently told the American Bar Association. “I urge them, and you, to watch what we do. I can tell you unequivocally that if you come in with transactions that would not fly in the past, you are likely to ‘crash’ unless you have compelling, stubborn facts on your side.” Muris then chastised the lawyers for publicly predicting the agencies would relax antitrust standards. “Those folks will be doing their actual or potential clients a big disservice if those clients act on that presumption,” he warned. The chairman also has said the FTC is close to challenging several mergers that were so small they were exempt from federal notification requirements. Some lawyers noted that most recent merger reviews were investigated under the Clinton regime, meaning they may not fairly reflect the views of the Bush enforcers. Yet others said Bush’s appointees could have squelched some of those investigations, noting that Republican staffers were on the job before the new agency heads were sworn in. Instead, they have allowed the cases to proceed, even if that might land the agencies in court. The best example of this scenario is Microsoft, where James appointed Philip S. Beck, a founding partner of law firm Bartlit Beck Herman Palenchar & Scott, and a Chicago litigator who most recently gained fame defending Bush in the Florida ballot dispute. James also retained Phillip R. Malone, who has managed the Justice Department staff investigation since the case started. Copyright (c)2001 TDD, LLC. All rights reserved.

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