(January 13) – “Federal antitrust enforcers are rethinking merger-review standards and could begin rejecting deals that once might have been approved with negotiated settlements or divestitures,” writes John Wilke in The Wall Street Journal this morning.

“The get-tough approach stems from uneasiness among officials that an increasing number of proposed deals present antitrust problems too intractable or complex to be addressed by simply selling some product lines or overlapping businesses.

“Federal Trade Commission Chairman Robert Pitofsky is expected to detail the agency’s evolving approach in a policy speech Feb. 17 in New York. Tuesday, he declined to give specific details of the policy change and cautioned that each merger is reviewed on its own merits.

“‘Where there is a good chance a settlement will work, we have an obligation to try,’ he said. ‘But there are more instances in which the proposed divestitures won’t end up protecting consumers … and therefore we should just say no.’

“The policy shift, which some antitrust lawyers complain is going too far, could threaten mergers already in the pipeline for review and has led to the demise of at least two deals recently, these lawyers say.
“‘They are clearly raising their standards for getting a deal through,’ said Keith Shugarman, an antitrust lawyer with Goodwin Procter & Hoar. ‘The fundamental merits of what is or isn’t an antitrust violation aren’t changing, but the standards for fixing it are, meaning more deals will be abandoned or repriced.’

“Mr. Pitofsky said the agency’s stance is simply responding to changes in the marketplace. ‘We’re being presented with more and more ambitious and complicated settlement proposals intended to get a merger through — way beyond what we’ve seen before.’

“His views are generally shared by the Justice Department, which splits enforcement duties with the FTC. In more complex deals, there can be divestitures that are competitively ineffective, and the agencies need to be on the alert for that danger, one official said.

“The FTC first signaled the evolving approach in a study during the summer that analyzed the outcome of scores of deals in which the agency had allowed a merger to go forward contingent on the sale of some assets to maintain competition in a market.

“The study found the divestitures that worked best were those in which a strong competitor got a business unit of one of the merging companies, while packages of asset sales to multiple buyers or those scattered around a region fared poorly.