Chapter 13. Judicial Relief and Remedies

• Pages: 428-483

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CHAPTER 13

JUDICIAL RELIEF AND REMEDIES

Private parties can often resolve the investigating agency’s concerns

about their merger short of litigation.1 Through “fix-it-first”

restructuring of their transaction, or through the negotiation of a consent

decree, the parties to a contested merger can address the agency’s

concerns and avoid the need for litigation.2 These prelitigation remedies

are employed in the majority of mergers that raise anticompetitive

concerns.3 In cases where the investigating agency or the parties to a

1.For a thorough discussion of those administrative procedures and

remedies, see ABA SECTION OF ANTITRUST LAW, THE MERGER REVIEW

PROCESS: A STEP -BY-STEP GUIDE (2d ed. 2001).

2.See also, R. Hewitt Pate, Ass’t Att’y Gen., Antitrust Div., Concerning

Antitrust Enforcement Oversight, Statement Before the House Committee

on the Judiciary (July 24, 2003), at

www.usdoj.gov/atr/public/testimony/201190.htm. The Antitrust Div. has

initiated a similar review of its practices and policies regarding remedies.

See Charles A. James, Ass’t Att’y Gen., Antitrust Div., Recent

Developments and Future Challenges at the Antitrust Division, Remarks

Before the Dallas Bar Ass’n (Sept. 17, 2002); at

www.usdoj.gov/atr/public/speeches/200239.htm; BUREAU OF

COMPETITION, FTC, A STUDY OF THE COMMISSION’S DIVESTITURE

PROCESS 10-11 (1999) (FTC’s study of divestiture orders from 1990 to

1994 indicates that divestiture of an entire business is more likely to

result in a viable operation than divestiture of selected assets of the

business); Richard G. Parker, Senior Deputy Director, Bureau of

Competition, FTC, Global Merger Enforcement, Remarks Before the

International Bar Association (Sept. 28, 1999) (discussing the FTC

Divestiture Study in the context of cases during the mid-1990s), at

www.ftc.gov/speeches/other/barcelona.htm.

3.See, e.g., A Positive Agenda for Consumers: The FTC Year in Review

(Apr. 2003), at www.ftc.gov/reports/aba/gpra2003.pdf (indicating that in

2002, 31 antitrust enforcement actions were taken and 19 consent decrees

entered into); Deborah D. Marjoras, Dep. Ass’t Att’y Gen., Antitrust

Div., Merger Enforcement at the Antitrust Division (Sept. 27, 2002), at

www.usdjo.gov/atr/public/speeches/200285.htm (noting that 2001 the

DOJ opened 131 preliminary investigations and challenged 21 mergers);

John M. Nannes, Deputy Ass’t Att’y Gen., Antitrust Div., Last Year and

This Year: The View from the Antitrust Trenches, Remarks Before the

New York State Bar Ass’n (Jan. 27, 2000), at

Judicial Relief and Remedies 429

transaction cannot reach a negotiated settlement, however, litigation

seeking preliminary or permanent relief may be initiated by the agency,

by state attorneys general, or by private parties.4 With the statutory

increase in the Hart-Scott-Rodino Antitrust Improvements Act of 1976

(HSR Act) “size of transaction” filing threshold in 2001 from $15

million to $50 million, there is now a greater likelihood of litigation

involving non-HSR reportable transactions.5

www.usdoj.gov/atr/public/speeches/4086.htm (noting that in FY 1999 the

DOJ challenged or advised parties of its intention to challenge 46

transactions, most of which were resolved by consent decrees); Richard

G. Parker, Senior Deputy Director, Bureau of Competition, FTC, Trends

in Merger Enforcement and Litigation, Remarks Before the Annual

Briefing for Corporate Counsel (Sept. 16, 1998), at

www.ftc.gov/speeches/other/parker.htm (pointing out that, as the FTC

neared the close of FY 1998, over 4,400 HSR filings had been received

and 23 enforcement actions had been initiated, resulting in 20 consent

agreements); see also Appendix O for selected merger enforcement

statistics.

4.See, e.g., Richard G. Parker, Senior Deputy Director, Bureau of

Competition, FTC, Trends in Merger Enforcement and Litigation,

Remarks Before the Annual Briefing for Corporate Counsel (Sept. 16,

1998), at www.ftc.gov/speeches/other/parker.htm (discussing FTC

merger litigation).

5.See, e.g., Aspen Tech. Inc., Docket No. 9310 (F.T.C. Aug. 7, 2003)

(complaint), at www.ftc.gov/os/2003/08/aspencmp.pdf (FTC post-merger

investigation of transaction despite exemption from the reporting

obligations of the HSR Act); Chicago Bridge & Iron Co., Docket No.

9300 (F.T.C. Oct. 5, 2001) (complaint), at

www.ftc.gov/os/2001/chicagobridgeadmincmp.htm (same); see also

Joseph J. Simons, Director, Bureau of Competition, FTC, Report from the

Bureau of Competition, Remarks Before The 51st Annual ABA Antitrust

Section Spring Meeting (Apr. 4, 2003), at

www.ftc.gov/speeches/other/030404simonaba.htm (“The number of

investigations of mergers not reported under HSR is up sharply since the

change in reporting thresholds”); see also FTC v. Hearst Trust, No.

1:01CV00734 (D.D.C. Nov. 9, 2001) (requiring Hearst to divest acquired

party and to disgorge $19 million in illegal profits); United States v. 3D

Systems Corp., No. 1:01CV01237 (D.D.C. Aug. 16, 2001) (DOJ blocking

3D’s $45 million acquisition of DTM until certain patents were licensed

to a third party competitor); FTC v. MSC Software, Docket No. 9299

(F.T.C. Aug. 14, 2002) (requiring MSC to divest two companies it had

acquired).

430 MERGERS AND ACQUISITIONS

A. Preliminary Relief

1. Preliminary Injunctions

Preliminary injunction actions, which seek to preserve the status quo

by preventing the consummation of a merger, are a powerful and

frequently used tool in Section 7 enforcement. They are particularly

important because many Section 7 cases do not survive beyond the

preliminary injunction stage. An unsuccessful effort to obtain a

preliminary injunction can be the plaintiff’s final battle in an effort to

block a merger (although the Federal Trade Commission (FTC or

Commission) may pursue administrative litigation against a merger even

after losing an action for preliminary injunction),6 and an unsuccessful

effort to defend against a preliminary injunction very often means the

proposed deal will be scuttled, given the costs, delay, and uncertainty of

a full-blown Section 7 trial.7

6.See FTC, Statement of Federal Trade Commission Policy Regarding

Administrative Merger Litigation Following the Denial of a Preliminary

Injunction, 1995 WL 369485 (F.T.C. June 21, 1995). The FTC has

adopted “fast-track” procedures for certain cases, 16 C.F.R. § 3.11A, to

respond to concerns about the “glacial place” of FTC administrative

proceedings; see, e.g., FTC v. Occidental Petroleum Corp., 1986-1 Trade

Cas. (CCH) ¶ 67, 071 (D.D.C.).

7.See, e.g., Missouri Portland Cement Co. v. Cargill, Inc., 498 F.2d 851,

870 (2d Cir. 1994) (“Experience seems to demonstrate that . . . the grant

of a temporary injunction in a Government antitrust suit is likely to spell

the doom of an agreed merger”); FTC v. Exxon Corp., 636 F.2d 1336,

1343 (D.C. Cir. 1980) (“[T]he issuance of a preliminary injunction

blocking an acquisition or merger may prevent the transaction from ever

being consummated”). Even the announcement of a government

challenge can end a planned acquisition. In fiscal years 1989 to 1994, the

FTC “voted to seek a preliminary injunction to block 32 transactions,”

and in 23 of those cases, “the parties either entered into a negotiated

settlement or withdrew from the transaction before a court decision on the

complaint.” FTC, Mergers: A View from the Federal Trade

Commission, 1995 WL 122744, at *3 (F.T.C. Mar. 15, 1995) (Remarks

of Commissioner Azcuenaga); FTC v. Staples, 970 F. Supp. 1066, 1093

(D.D.C. 1997) (“This decision [to grant a preliminary injunction] will

most likely kill the merger”).