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One of the most watched battles among Washington’s antitrust lawyers ended Monday when the Department of Justice won responsibility for reviewing Whirlpool Corp.’s acquisition of Maytag Corp. Disappointed staff lawyers at the Federal Trade Commission, who had hoped to review the high-profile, $2.7 billion merger, confirmed that the Justice Department had snatched the assignment. Senior staff at both agencies had been debating the merits of each agency’s expertise, at least since the companies submitted their obligatory Hart-Scott-Rodino Act merger filing with the agencies more than three weeks ago. In the meantime, the initial 30-day waiting period, in which the presiding federal agency typically must approve the deal or make a second request for information, has been ticking away. Consequently, DOJ now has about a week remaining on the waiting period. Because Justice Department lawyers have little shot of completing their review in that short a time, the companies are almost certain to get a second request. The Whirlpool-Maytag deal is a coveted prize for regulators because of the many thorny issues that need to be addressed. For instance, market share is high for several appliances, but especially washers and dryers. Also new competition from overseas is muddying the competitive outlook. Input from retailers, the manufacturers’ direct customers, typically could make or break the deal, since only four large retailers account for about 65 percent of the appliance sales in the country. But Asian upstarts such as LG Group and Haier Group Co. could provide momentum toward approval if regulators deem them serious contenders. The agencies were also eager to land the merger because the winner gets clear title to future consumer appliance merger reviews. Although both agencies are obligated to use the same legal standards when reviewing the deal, company officials are likely to be relieved that the assignment didn’t go to the FTC, where political machinations could have complicated the proceedings. If the FTC had reviewed the deal, an appliance company that wants to block the merger might have gained a leg up by hiring behemoth law firm Jones Day, which counts FTC chairman Deborah Platt Majoras’ husband John among its partners. In that case, the chairman would have needed to be recused. Coupled with an empty Republican seat, her recusal would have created a 2-to-1 majority for commission Democrats, who traditionally have been more likely to impose more significant divestitures or other conditions than Republicans. The appliance turf war is the latest example of jurisdictional spats that flare up between the agencies. The HSR Act set the filing requirements for companies keen on merging, but it said nothing about which agency is supposed to review which deals, a glaring shortcoming of the law, say industry lawyers. To compensate, the agencies have established loose policies for divvying up mergers. About four years ago, Timothy J. Muris, who was then the FTC chairman, and Charles James, who was then assistant attorney general for DOJ’s antitrust division, agreed to specific guidelines for dividing deals, largely along industry lines. But legislators on Capitol Hill were enraged by the agreement and ordered Muris and James to scupper it. “It’s a failure in the system,” said a member of the antitrust bar who once served at one of the agencies. “It shows how unfortunate it is that the clearance agreement that almost came to pass was quashed.” Despite the law’s failure to address the jurisdictional issue, antitrust lawyers said regulators could try harder to quickly settle disputes and get merger reviews under way. “This is obstructing the free-market economic process the HSR requirements are supposed to be supporting,” said one antitrust partner at a private firm in Washington. “The only excuse they have is that they were forced into this by Congress. Even so, you’d think they’d find some better way.” Federal officials said the process largely functions well. “Generally speaking, the clearance process works,” said Gina Talamona, spokesperson for the DOJ’s antitrust division. “Both agencies are working to clear the [Maytag] matter as quickly as possible.” FTC officials agree with their counterparts on the cooperative efforts between the agencies. “The clearance process is going extremely well,” said Bernard A. Nigro, deputy director of the bureau for competition. “Matters are being cleared quickly and with little disagreement. Occasionally, complex matters may take slightly more time.” Copyright �2005 TDD, LLC. All rights reserved.

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