Role of State Attorneys General and Other Federal Regulatory Agencies

A. State Attorneys General
The state attorney general is the state’s chief legal official, almost
always elected, with jurisdiction over all matters that affect the state and
its citizens. This includes the authority to investigate and challenge
mergers, not only under their own state antitrust laws, but also under
federal law. For example, like any other person, states may bring actions
for damages, injunctive relief, and fees under Sections 4 and 16 of the
Clayton Act.320 In addition, a state may act as parens patriae and seek
injunctive relief to prevent harm to its general economy.321 Because of
this parens patriae status, states do not face the standing and antitrust
injury problems that have limited private challenges to proposed merger
320. See 15 U.S.C. §§ 15, 26; Cal. v. Am. Stores Co., 495 U.S. 271 (1990);
Hawaii v. Standard Oil Co., 405 U.S. 251 (1972); Ga. v. Pa. R.R. Co.,
324 U.S. 439, 447 (1945).
321. Standard Oil, 405 U.S. at 251 (establishing right to seek injunctive relief
to remedy injury to the general economy of the state).
322. The right of states to investigate and challenge mergers was made clear in
American Stores, 495 U.S. at 271. In that case, after the Federal Trade
Commission reviewed a merger and entered into a consent decree to
resolve its competitive concerns, the Attorney General of California
challenged the merger and sought, among other things, an order of
divestiture. Reversing the Ninth Circuit, the U.S. Supreme Court held that
private parties, including state attorneys general, have the right under the
Clayton Act to seek orders of divestiture against anticompetitive mergers,
and that this right exists despite inconsistent or conflicting actions taken
by a federal reviewing agency. By so holding, the U.S. Supreme Court
effectively concluded that the states had remedial authority comparable to
that of the federal agencies. Cf. Cargill, Inc. v. Monfort, Inc., 479 U.S.
104, 109 (1986) (discussing the injury that plaintiffs generally must
establish to obtain damages and injunctive relief).
96 The Merger Review Process
The attorneys general have been involved in the antitrust review of
mergers for more than two decades.323 This authority to review mergers
has been used particularly, but by no means exclusively, with respect to
mergers that have localized effects on the day-to-day lives of the state’s
citizens. It has become, in fact, relatively rare for the affected state
attorneys general not to become involved in the review of mergers, for
example, between competing hospitals,324 school bus companies,325 and
funeral homes, or retail markets, such as supermarkets, department
stores, and gasoline stations.326 States will also give priority to mergers
that are national in scope where their proprietary and regulatory interests
are impacted in some fashion.327
Although a complete history of state merger enforcement is beyond
the scope of this chapter, a bit of history illustrates why many state
enforcers view their role in merger enforcement as an important one.
Having been largely dormant for years, state enforcement efforts
escalated in the 1980s, in part as a response to a perceived reduction in
323. See, e.g., Albertson’s Inc., 63 Fed. Reg. 51,933 (F.T.C. Sept. 29, 1998)
(aid to public comment) (supermarkets); Federated Department Stores, 7
Trade Reg. Rep. (CCH) ¶ 50,204 (F.T.C. Aug. 30, 2005) (department
stores); Washington v. Texaco, Inc., 1997-2 Trade Cas. (CCH) ¶ 72,019
(W.D. Wash. 1997) (gas stations).
324. See, e.g., California v. Sutter Health Sys., 84F. Supp. 2d 1057 (N.D. Cal.
2000), aff’d, 217 F.3d 846 (9th Cir. 2000), amended by 130 F. Supp. 2d
1109 (N.D. Cal. 2001).
325. Massachusetts v. FirstGroup PLC + Laidlaw Int’l, 2007 WL 3225347 (D.
Mass. 2007).
326. See, e.g., Albertson’s, Inc., 63 Fed. Reg. 51,933 (FTC Sept. 29, 1998)
(aid to public comment) (supermarkets); Federated Department Stores, 7
Trade Reg. Rep. (CCH) ¶ 50,204 (FTC Aug. 30, 2005) (department
stores); Washington v. Texaco, Inc., 1997-2 Trade Cas. (CCH) ¶ 72,019
(W.D. Wash. 1997) (gas stations).
327. The states’ interest in Oracle’s hostile tender offer for PeopleSoft was
driven in part by the states’ concern that Oracle would not adequately
support PeopleSoft software used by many state agencies after the
acquisition. United States v. Oracle Corp., 331 F. Supp. 2d 1098 (N.D.
Cal. 2004). Similarly, state review of the LiveNation combination with
Ticketmaster was fueled in large part by concerns about the impact on
government-owned or regulated concert venues. Final Judgment, United
States v. Ticketmaster Entm’t, 2010 U.S. Dist. LEXIS 88626 (D.D.C.
Role of State Attorneys General and Other Federal Regulatory Agencies 97
enforcement by the Reagan Administration.328 Faced with decreasing
federal enforcement at a time when mergers were increasing in number
and size, the states, through the National Association of Attorneys
General (NAAG), issued the NAAG Merger Guidelines329 to help provide
a framework for states to challenge mergers on their own. Most states
also adopted the NAAG Compact in 1987, which was revised in 1994,
with the goal of encouraging parties to submit a copy of their federal
premerger filings to the states.330
Practical Considerations Dealing with State Attorneys General
State involvement in a federal merger investigation can present a
number of challenges to the merging parties. It is important for the
parties to understand on a practical level how the states approach their
enforcement responsibilities and the mechanisms available to facilitate
this process.
328. For example, then New York Attorney General Robert Abrams observed
at the time, “We have been witnessing the watchdog put to sleep. The
states have had to fill the breach.” Daniel B. Moskowitz, Why the States
Are Ganging Up on Some Giant Companies, BUS.WK., Apr. 11, 1988, at
62, 62.
(1993), reprinted in 4 Trade Reg. Rep. (CCH) ¶¶ 13,405, 13,406
(Mar. 30, 1993) (NAAG Merger Guidelines), available at http://www.
COMPACT (Mar. 21, 1994), reprinted in 4 Trade Reg. Rep. (CCH)
¶ 13,410(NAAG Compact), available at
pdf/200612-antitrust-voluntary-premerger-disclosure-compact.pdf. A list
of the parties to the NAAG Compact, the NAAG resolutions adopting the
NAAG Compact, a background statement, and the NAAG Compact itself
are available at
voluntary-premerger-disclosure-compact.pdf, and in the State Practices,
Guidelines/Protocols section of the Web site of the State Enforcement
Committee of the ABA Section of Antitrust Law, available at
[ (State
Enforcement Committee Web site).

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