The Federal Trade Commission and the Justice Department’s Antitrust Division released the agencies’ 41st Annual Hart-Scott-Rodino Report. The report provides HSR Premerger Notification data for fiscal year 2018. Under the HSR Premerger Notification Program, companies report some proposed mergers and acquisitions to the government before they occur, and the agencies identify and challenge those transactions that may substantially lessen competition in violation of federal law.
As the report explains, companies notified the agencies of 2,111 HSR reportable transactions during fiscal year 2018, which is a 2.9 percent increase over the 2,052 transactions reported in fiscal year 2017. The report also summarizes the agencies’ merger enforcement activities for fiscal year 2018, with a total of 39 merger challenges brought to maintain competition in sectors of great importance to consumers, including healthcare, technology, medical devices, energy, and consumer goods and services.
The Federal Trade Commission alone brought 22 merger enforcement actions in fiscal year 2018, including five mergers that the Commission voted to block through litigation. In five other matters, the parties abandoned or restructured their transaction due to the Commission’s antitrust concerns. The Commission also issued 12 consent orders, resolving competition concerns in markets affected by the merger.
Of note, the FTC successfully litigated its preliminary injunction action challenging the merger of Wilhelmsen Maritime and Drew Marine, the two largest suppliers of water treatment chemicals and services used by large ships to maintain their on-board ship equipment. The agency alleged that the combined firm would control at least 60 percent of the global marine water treatment chemical and service market. After the U.S. District Court for the District of Columbia granted a preliminary injunction, the parties abandoned the merger.
Similarly, the Commission issued an administrative complaint challenging Tronox Limited’s proposed acquisition of Cristal. The firms were the two largest suppliers of chloride process titanium dioxide, a white pigment used in a variety of products including paint, industrial coatings, plastics, and paper. According to the complaint, the proposed transaction would have increased the likelihood of coordination among the remaining competitors in the industry, as well as the likelihood that the combined firm could exercise market power to reduce future output and raise prices. The FTC obtained a preliminary injunction in federal court to temporarily enjoin the transaction pending the outcome of the administrative proceeding. In December 2018, the administrative law judge issued an initial decision finding that the merger would substantially lessen competition in violation of Section 7. In April 2019, Tronox and Cristal agreed to divest all of Cristal’s North American titanium dioxide assets, ending 16 months of litigation over the proposed transaction.
The Report also provides a 10-year summary of HSR transactions reported, second requests issued, and early terminations granted by the agencies, as well as a detailed statistical profile of transactions reported during fiscal year 2018.
Enacted by Congress in 1976, the Hart Scott Rodino Act gives the federal government the opportunity to investigate and challenge mergers that are likely to harm consumers before injury occurs. The Commission vote to issue the report was 5-0. (FTC File No. P110014; the staff contact is Nathan Hawthorne, Bureau of Competition, 202-326-3568.)
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