Partial Acquisitions

A. Introduction
Section 7 of the Clayton Act (Section 7)1 prohibits acquisitions that
may substantially lessen competition, and in both theory and practice
applies to an acquisition of “any part” of another company. Therefore,
partial acquisitions (i.e., acquisitions that involve something less than an
entire entity) fall under Section 7’s purview.
As discussed below, the Antitrust Division of the Department of
Justice (DOJ or the Division), the Federal Trade Commission (FTC or
the Commission), and the courts have identified three main concerns in
the partial acquisition context: (1) the potential of one company to
control or influence the decisionmaking of another (including pricing and
output decisions); (2) the potential alteration of one company’s incentive
to compete agai nst the other (t hrough an equit y position or mor e direct
method); and (3) the potential for the exchange of competitively sensitive
information. As to all three concerns, the DOJ, the FTC, and the courts
have traditionally looked to certain factors to determine whether a given
partial acquisition violates Section 7—mainly, the role (if any) of an
acquirer in governing and managing the target post-acquisition (e.g.,
through a seat on the board of directors) and the size of the ownership
stake in the target.
In addition to Section 7 issues, partial acquisitions may trigger
potential concerns under Section 1 of the Sherman Act (Section 1),2
1. 15 U.S.C. §18.
2. 15 U.S.C. §1.
314 Mergers and Acquisitions
Section 8 of the Clayton Act (Section 8),3 and the Hart-Scott-Rodino
Antitrust Improvements Act of 1976.4
B. Partial Acquisitions under Section 7
1. Transactions Covered
By its terms, Section 7 covers two types of partial acquisitions: asset
purchases and stock purchases. While the remainder of this chapter will
focus primarily on the acquisition of stock, it is worth noting that courts
generally interpret the term “asset” broadly, thereby “encompassing a
[wide] spectrum of transactions . . . .”5 For example, several courts have
classified intellectual property6 and a long term, exclusive distribution
license7 as an “asset” for Section 7 purposes.
2. Concerns
Partial acquisitions can have more attenuated anticompetitive effects
than complete acquisitions to the extent the parties continue to compete
(although efficiencies may also be less significant).8 Nevertheless, where
3. 15 U.S.C. §19. See part D of this chapter; see also United States v. First
Nat’l Bank & Trust of Lexington, 376 U.S. 665, 672-73 (1964) (“Where,
as here, the merging companies are major competitive factors in a
relevant market, the elimination of signi ficant competition between
them,” by merger or consolidation, itself “constitutes a violation of
Section 1 of the Sherman Act.”).
4. 15 U.S.C. §18a. See part D of this chapter and Chapter II .C. The FTC
may also seek to utilize Section 5 of the FTC Act, 15 U.S.C. § 45.
5. United States v. Columbia Pictures Corp., 1 89 F. Supp. 153, 182
(S.D.N.Y. 1960) (“As used in this statute, and depending upon the factual
context, ‘assets’ may mean anything of value.”).
6. SCM Corp. v. Xerox Corp., 645 F.2d 1195, 1205 (2d Cir. 1981) (defining
a patent as an “asset”); United States v. Beatrice Foods Co., 344 F.Supp.
104, 114 (D. Minn. 1972) (same for trademarks), aff’d, 493 F.2d 1259
(8th Cir. 1974). See also U.S. DEPT OF JUSTICE & FED. TRADE COMMN,
5.7 (1995), available at
0558.htm (noting t hat the agencies will apply a merger analysis to the
outright sale of exclusive licensing of intellectual property).
7. Columbia Pictures, 189 F. Supp. at 183.
MINORITY SHAREHOLDINGS 176 (June 23, 2009), available at http://

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