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Companies hoping to reduce the extra cost and delay of state merger reviews won’t get any help from the American Bar Association, which refused on Thursday to recommend any decrease in state regulators’ authority to review deals. Merging companies must obtain approval from federal antitrust regulators, but individual states may exert authority over deals that affect their residents as well. The added layer of reviews often causes delay and some additional costs, the ABA acknowledged in comments submitted to the Antitrust Modernization Commission, but the nation’s primary trade association for lawyers stopped short of condemning the overlap. The Antitrust Modernization Commission is a government-sponsored task force Congress created in 2002. The commission is charged with examining whether there is a need to modernize the antitrust laws as well as with identifying specific areas ripe for change. The panel’s report to Congress is due July 2007. To prepare the report, the commission has asked various organizations to comment on a range of issues, including the federal-state relationship in merger reviews. The downside of the dual process includes “delay and costs of duplicative review,” according to the ABA. State attorneys general investigations can sometimes be “motivated by political, rather than competition interests.” The ABA also suggests that states often have a different approach to competition issues and potentially very different resolutions to competitive problems than federal regulators. Various states, including Pennsylvania, Illinois and South Carolina, are currently pressing their interest with various energy deals. More energy companies are looking to expand their footprints through mergers, increasing the likelihood of additional state involvement. In some cases, according to Diana Moss at the American Antitrust Institute, state officials have a tendency to focus on consumer protection issues rather than competition-related matters. The ABA recommended that the AMC “consider measures to reduce the costs associated with dual enforcement,” such as finding ways to make state and federal regulators divide responsibilities to avoid duplication during investigations. Corporate attorneys have long complained that states interfere with federal antitrust cases and point to the state lawsuit against Microsoft Corp. as a prime example. The federal case was resolved while state regulators held out for additional remedies, causing the judge in the case to refer the matter to an arbitrator, who ultimately was also unable to impose remedies settling the contentious issues. The ABA reviewed various matters but was unable to create a database that would help weigh the costs and benefits of state participation in merger analysis. The statement suggested that such detailed information could assist in balancing the value of a state backup system with the cost of delay and disparate approaches to remedies. Advocates of strong state merger authority say state attorneys general often can be relied on to enforce federal antitrust laws “to counter periods of lax federal enforcement,” the ABA noted. Of further benefit to consumers is the enhanced ability to protect local competition, which may be below the radar of federal regulators. “This cooperation has been particularly useful in healthcare and energy transactions,” the ABA stated. Copyright �2005 TDD, LLC. All rights reserved.

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