Antitrust partner Joel Mitnick comments on recent outcomes and considerations with regard to the DOJ’s current antitrust litigation and enforcement agenda.
(Bloomberg) — In the span of just a month, federal judges rejected the US Justice Department’s attempts to block three mergers in the health technology, agriculture and defense contracting industries.
The agency is considering appeals — and points out it’s racked up wins in its aggressive antitrust enforcement push when companies abandoned deals following its lawsuits.
But the trio of litigation defeats illustrates the difficulties facing President Joe Biden’s administration as it seeks to persuade a conservative federal judiciary to reverse decades of business-friendly court decisions favoring deals.
The Justice Department is “having a bumpy time in the courts,” said William Kovacic, an antitrust professor at George Washington University Law School who served as chairman of the Federal Trade Commission under President George W. Bush. The department’s lawyers have taken “a very strong stand on settlements, saying that unless we have the utmost confidence in the settlement we’re going to move to block.” But judges, who often know little about antitrust, aren’t convinced, he said.
The setbacks come as antitrust officials weigh whether to block pending deals including two bank mergers and JetBlue Airways Corp.’s proposed acquisition of Spirit Airlines Inc.
Since Biden took over in January 2021, the Justice Department has filed a record number of antitrust suits to block deals it alleges would harm consumers or workers — a contrast to the Trump and Obama administrations, which routinely approved mergers with conditions.
The stepped-up enforcement has yielded results: Companies have abandoned four deals in the face of government lawsuits. Those included Aon Plc and Willis Towers Watson Plc, two of the world’s largest reinsurance companies, and China International Marine Containers Group Co. and Maersk Container Industry A/S, two of the four largest suppliers of refrigerated shipping containers.
“Our enforcement record is strong,” said Assistant Attorney General for Antitrust Jonathan Kanter in a statement, pointing to the abandoned mergers.
In the last year, the agency has brought its first case under an agriculture antitrust law, the Packers and Stockyards Act, and announced an initiative aimed at enforcing a dormant law forbidding executives from sitting on the boards of competing companies, Kanter said.
In six merger challenges, the companies opted for litigation, requiring Justice Department attorneys to prove to a federal judge that the deals would likely result in less competition. The department has lost in three of those cases.
In two of the unsuccessful challenges, DOJ’s backers have touted how the litigation extracted greater concessions than the companies initially offered in negotiations, softening the loss.
“Part of the job that we have before us is to litigate cases, and to take risks,” Kanter told a Senate panel last month in the wake of his division’s first loss. “I am committed to bringing difficult cases.”
Among those difficult cases was one in which a federal judge last month found in favor of UnitedHealth Group Inc. in its acquisition of Change Healthcare Inc., rejecting DOJ allegations that the largest US health insurer would use sensitive data from Change’s network to disadvantage rivals. The agency is considering whether to appeal.
A week later, a Delaware federal judge ruled against DOJ lawyers who argued that US Sugar Corp.’s purchase of a rival sugar producer owned by the Netherlands’ Louis Dreyfus Co. would lead to higher prices. And earlier this month, a Maryland federal court sided with Booz Allen Hamilton Holding Corp. in its bid to buy rival defense contractor EverWatch Corp., a move that prosecutors said would eliminate competition for a key National Security Agency contract.
Case Appeals
The Justice Department is appealing in the sugar case and considering an appeal against Booz Allen. Appeals courts would likely take months to rule.
A judge has yet to decide another lawsuit challenging a merger between Penguin Random House and rival book publisher Simon & Schuster Inc., while the government is still litigating a case in Boston to unwind a partnership between American Airlines Group Inc. and JetBlue Airways Corp.
A trial over a proposed merger of Sweden’s Assa Abloy AB and Spectrum Brands Holdings Inc. has yet to be scheduled.
DOJ’s “unprecedented string of losses” may cause companies pursuing deals to view the agency as a paper tiger when it comes to its antitrust lawsuits, said Joel Mitnick, an antitrust attorney with Cadwalader, Wickersham & Taft LLP.
“An investigation is inevitable, but an injunction is not,” Mitnik said.”If a client is willing to go the length of fighting something in court, they may not have such a bad chance of success.”
George Washington University’s Kovacic noted that despite the spate of losses, the government still has a chance to win on appeal.
These cases present opportunities to clarify some key points on merger law, he said. This “is hardly over.”