Friday, February 1, 2013
Posted by D. Daniel Sokol
Bill Baer has been active in his first 30 days. Yesterday DOJ Antitrust issued a press release about how it was going to try to block the proposed Ambev/Grupo Modelo merger. Also yesterday in my antitrust mergers class (3 credits of the best antitrust class in the US, no question as it is also the only antitrust mergers class in the US) we discussed Staples/Office Depot with some help from Jim Fishkin of Dechert who worked on the case with none other than the very same Bill Baer who now heads DOJ Antitrust and who was in 1997 head of the Bureau of Competition at the FTC. It is a wonderful case and I think the most transformative merger case of a generation. Thank you Jim, Bill, then Chairman Bob Pitofsky and Judge Hogan.
My merger class got me thinking about what the press got wrong about both Staples then and now Ambev. One thing that has bothered me about the business press on the Ambev deal is the importance that they give to the dollar amount of the deal. Journalists, the size of the deal is not of consequence for an antitrust challenge. It is about the competitive effects - are consumers worse off because of the merger. There are plenty of large deals that have little antitrust risk. What makes Ambev/Grupo Modelo significant is that there are potentially significant anti-competitive effects to the merger.
From the academic perspective, I hope for a litigated case as we need more court guidance on the application of the 2010 Horizontal Merger Guidelines. Also, from a teaching perspective, retail mergers are fun because the students get into the material. For this reason I dropped Arch Coal (students are not so interested about coal) and replaced it with Universal/EMI (students love the music industry).