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Merger activity in South Florida dropped nearly 30 percent last year, but federal scrutiny of corporate mergers for possible antitrust violations may be on the rise, according to Mozelle Thompson, a commissioner with the Federal Trade Commission. Increased antitrust scrutiny from federal regulators coincides with the ongoing takeover battle among top players in Miami’s high-profile cruise industry. “We’re always concerned about mergers that will overly concentrate a market in a way that will harm competitors and consumers,” he said in an interview with the Daily Business Review. Thompson was in Miami late last week to deliver a keynote speech at a Florida Bar meeting. The FTC — which examines M&A transactions for possible anti-competitive behavior — is concerned about antitrust violations in the cruise industry, as well as anti-competitive issues generated by bankruptcy court sales of corporate assets. Other issues involve so-called “new economy” companies in which the FTC is concerned about joint ventures, intellectual property agreements and other corporate alliances that could suppress competition and hurt consumers. Such issues are important to South Florida following a number of high-profile Chapter 11 bankruptcy filings here and the number of joint ventures involving high-tech players in the region. Clearly, South Florida is on the FTC antitrust radar, especially in the wake of the ongoing takeover battle in cruise industry. That dispute involves Miami-based Carnival Corp.’s $4.6 billion takeover bid for London-based P&O Princess Cruises PLC, announced Dec. 17. That deal followed on the heels of the Nov. 20 merger announcement involving Miami-based Royal Caribbean Cruises and P&O Princess Cruises in a transaction valued at nearly $6 billion. This week, London-based newspapers reported that Carnival would sweeten its bid for P&O Princess. But even as the tug of war continues, both transactions are under FTC review, Thompson confirmed. “It’s a pending matter,” he said. “There are some interesting competitive issues. We will review them closely.” Citing FTC policy, he declined to discuss specifics. Antitrust review by U.S. regulators was one of several issues highlighted in a Jan. 6 letter from Micky Arison, Carnival’s chairman and chief executive officer, to the board of P&O Princess. “We understand that the FTC has started an investigation of the Royal Caribbean proposal involving the same lawyers and economists who are investigating our proposal,” Arison wrote, “and we believe that both investigations will involve the same data and be conducted under the same legal standards and on essentially, the same timetable.” He argued that both transactions should be approved by “all relevant antitrust authorities.” Thompson declined to comment on the timetable or status of those investigations. In every proposed merger, the parties involved are required to file antitrust documents with regulators. Those documents are reviewed with information supplemented by interviews with corporate officials and market competitors, Thompson said. If the agency rules that the merger poses antitrust issues, several solutions are proposed, including divestitures of corporate assets, a halt to a merger or civil money penalties, Thompson said. In addition to concerns about traditional mergers, the FTC is worried about the sale of corporate assets in bankruptcy auctions — a key trend in South Florida, particularly during a recession. Federal regulators are concerned that mergers resulting from pre-packaged bankruptcies may be structured to avoid antitrust scrutiny, Thompson said. In essence, such deals may allow one company to take over another without going through the usual antitrust procedure. Within the last year, South Florida companies such as Fort Lauderdale’s Gerald Stevens, a retail florist that filed for Chapter 11 bankruptcy court protection, have sold assets to competitors through bankruptcy auctions. Thompson declined to comment on specific cases. But in general, the FTC is working more closely with the judiciary and lawyers to generate a better sense of the competitive impact posed by the sale of assets in bankruptcy courts, Thompson said. Additionally, he said, the FTC has spotted a rising trend in intellectual property cases, where a company aggressively purchases or launches a joint-venture agreement with the owner of competing patents or trademarks to suppress their innovations and establish or maintain a competitive edge. The side effects of this include escalating prices for consumers and a threat to competition and the marketplace, Thompson said. The issue is important for high-tech companies, pharmaceuticals and software developers. To address that issue and others related to intellectual property, the FTC, the U.S. Department of Justice and the U.S. Patent and Trademark Office will launch a series of workshops on antitrust and intellectual property, Thompson said, adding that a key member of the Florida Bar will offer input.

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