Tuesday, April 12, 2011
Posted by D. Daniel Sokol
Today's front page Wall Street Journal article titled This Takeover Battle Pits Bureaucrat vs. Bureaucrat suggests that relations are not good between the two agencies. Among the juicy parts:
Mr. Kovacic said his agency had a better working relationship with the European Union than it did with the Justice Department, just two blocks away.
Tom Rosch unloaded even further:
Mr. Rosch also suggested the head of the Justice Department's Antitrust division, Christine Varney, was inclined to take a lenient view because of her prior job as a lawyer representing the American Hospital Association, which he said was "a clear apparent conflict of interest—if not a real conflict of interest."
I want to focus on the merger issues. Kovacic is quoted as saying:
"The fact and appearance of a contest are bad for the coherence," says Mr. Kovacic. "If you develop a perception that you're going to get different outcomes depending on where [a deal] goes, your system suffers."
On mergers, my paper (17 Geo. Mason L. Rev. 1055 (2010)) that had both quantitative and qualitative interviews with merger practitioners suggested the following:
One problem that a number of respondents mentioned is clearance. Clearance is not an issue in many mergers. However, most practitioners believed that when a clearance battle emerges, it raises a potentially significant problem. As one practitioner recounted, “It is not a problem except when it is and when it is, it is a big problem.” Clearance battles between the two agencies, over which agency will review the merger, add to increasing costs for mergers by creating deal delays for the merging parties. [FN483] Clearance battles create additional business uncertainty for clients and do not give clients the thirty-day comfort that they want. [FN484] On the margins, a number of practitioners mentioned that this creates problems for financing some deals.