Federal Antitrust Police Gearing Up for a Closer Look

There will soon be a lot more cops on the merger beat. Their orders: Tougher review of deals, past and present.

By Richard Sammon, Senior Associate Editor, The Kiplinger Letter

June 23, 2009

The federal government’s antitrust enforcers intend to take a hard look at mergers and acquisitions -- and at more than just the megamergers that gain the most attention. The Justice Department will soon more than double staff and resources for its economic and market analysis division to more closely monitor corporate mergers and their aftermath. They’ll be looking at the impact many mergers have on prices, local competition, product availability and business and consumer bottom lines.

Several sectors are likely to feel the effect of more monitoring: privately run hospitals, nursing homes and medical clinics; cable television services; bottling and canning operations; paper mills; auto lube shops; breakfast cereal makers and suppliers; commercial moving line trucking companies; and supermarket and mini-market chains, among others.

The Justice Department says its goal in following up after mergers are complete is to gain a storehouse of data and pricing information to use as a reference in deciding whether to intervene in future proposed mergers. Among those it’ll be reviewing are two big drug deals completed within the past six months -- between Merck and Kenilworth and between Pfizer and Wyeth.

The department normally investigates market practices when a complaint or objection is raised about a pending merger. The additional staff, which will be placed in several Justice Department offices nationally, will enable the agency to scrutinize mergers that otherwise might not raise a question or a red flag or ones where no objection or letter of concern was entered. It also means that the department will be looking at the effect of smaller mergers under the $50-million market value.

It is the rare merger under this value that attracts federal antitrust interest. That may no longer be the case, though, as more industrial sectors and smaller corporate players are monitored more closely for everything from post-merger signs of price manipulation, collusion or bid rigging to any of a variety of predatory practices.

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