“Be Careful What You Wish for”: U.S. Government Enforcement of Merger Consent Decrees

• Date: 01 June 2013
• Author: Elaine Ewing,David Gelfand
• Published date: 01 June 2013
• DOI: 10.1177/0003603X1305800203
• Subject Matter: Article

“Be careful what you wish for”:

U.S. government enforcement

of merger consent decrees

BY DAVID GELFAND*AND EL AINE EWIN G**

The U.S. Federal Trade Commission and Department of Justice

Antitrust Division have a numberof formal and informal tools at their

disposal to enforce merger consent decrees. This article reviews these

tools, the frequency with which they are used, and the circumstances

under which they are used, with a part icular focus on instances in

which the agencies have taken formal enforcement action. Because

these obligations should be considered carefully during the negotia-

tion process, the article concludes by offering practical advice for

antitrust practitionersnegotiating consent decrees.

KEY WORDS:mergers, consent decrees, compliance, enforcement, FTC, DOJ

I. CONSENT DECREE BASICS

The Federal Trade Commission (FTC) and the Antitrust Division of

the Department of Justice (DOJ) have authority to review mergers and

acquisitions to determine whether they violate section 7 of the Clay-

ton Act, i.e., whether they may to lead to a “substantial lessening of

competition.”1

THE ANTITRUST BULLETIN:Vol. 58, Nos. 2 & 3/Su mmer-Fall 2013 :225

* Partner, Cleary Gottlieb Steen & Hamilton LLP, Washington, DC.

** Associate, Cleary Gottlieb Steen & Hamilton LLP,Washington, DC.

115 U.S.C. § 18 (2012).

© 2013by Federal Legal Publications, Inc.

If the agency reviewing a transaction determines that it likely vio-

lates section 7, it can seek an injunction to block the transaction. Alter-

natively, if the parties are amenable and the agency believes that a

divestiture or other remedy will address the potential competitive

harm from the transaction, the agency can enter into a consent decree

with the parties allowing the transaction to go forward subject to pro-

visions that are designed to res olve the competitive concerns. The

consent decree spells out the specific obligations of the parties and

creates a binding obligation to abide by its terms.

Most commonly, consent decrees require that businesses or assets

promptly be divested in a manner that will restore competition in an

overlapping product market. Behavioral remedies are sometimes used,

however, and became morecommon during the firstterm of the Obama

administration.2The provi sions of be havioral consen t decrees can

include observing informational firewalls (Coca-Cola),3nondiscrimina-

tion provisions (Comcast/NBC),4anti-retaliation provisions (Ticketmaster

/Live Nation),5licensing provisions (Google/ITA),6and other requirements

tailored to particular competitive issues. They are most commonly used

to address vertical concerns; behavioral remedies are rarely used as the

sole meansof resolving horizontal competition concerns.

Depending upon the circumstances, the reviewing agency might

require a “buyer up front” divestiture or a “post-order” divestiture.A

consent decree providing for a buyer up front will specify the divesti-

226 :THE ANT I T R U S T BULLETIN:Vol. 58, Nos. 2 & 3/Summer-Fall 2013

2See, e.g., Decision and Order, Coca Cola, Inc., No. C-4305 (F.T.C. Nov.

5, 2010), available at http://www.ftc.gov/os/caselist/1010107/101105 cocaco-

lado.pdf; Decision and Order, PepsiCo, Inc., No. C-4301 (F.T.C. Sept. 28, 2010),

available at http://www.ftc.gov/os/caselist/0910133/100928 pepscodo .pdf;

Final Judgment, United States v. Ticketmaster Entm’t, Inc., No. 1:10-cv-00139-

RMC (D.D.C. July 30, 2010), available at http://www.justice .gov/atr/cases/

f260900/260909.pdf; Final Judgment, United States v. Google, Inc., No. 1:11-

cv-00688-RLW, (D.D.C. Oct. 5, 2011), available at http://www .justice.gov /

atr/cas es/f275 800/2758 97.pdf; F inal Judg ment, Uni ted States v. Comca st

Corp., No. 1:11-cv-00106-RJL (D.D.C. June 29, 2011), available at http://www

.justice.gov/atr/cases/f272600/272610.pdf.

3Coca Cola, Inc., No. C-4305, at 6–10.

4Comcast Corp., No. 1:11-cv-00106-RJL, at 19.

5Ticketmaster, No. 1:10-cv-00139-RMC, at 19–21.

6Google, Inc., No. 1:11-cv-00688-RLW, at 13–21.