April 11, 2016

The Antitrust Week In Review

Here are some of the developments in antitrust news this past week that we found interesting and are following.

U.S. Sues ValueAct, Saying Hedge Fund Violated Antitrust Law.  Not long after Baker Hughes and Halliburton announced a merger agreement in November 2014, the prominent hedge fund ValueAct  started acquiring stakes in both energy giants.  The hedge fund came up with a plan if the $35 billion deal turned messy:  to push the chief executives to do what it took to ensure the deal went through.  That strategy (and when ValueAct came up with it) is at the heart of a $19 million antitrust lawsuit filed by the U.S. Department of Justice.  According to the government, ValueAct violated the Hart-Scott-Rodino Act when it failed to notify regulators upon acquiring about $2.5 billion worth of stock in both Baker Hughes and Halliburton.

Mega deals morph into mega problems for Wall Street.  Some of the mega transactions that had champagne corks popping in boardrooms are running into antitrust problems and, in the case of pharmaceutical firm Pfizer Inc’s $160 billion takeover of rival Allergan PLC, political opposition to a deal that envisaged the biggest drug company in the United States moving to Ireland to lower its taxes.  The U.S. Treasury unveiled new rules last week that, while they did not name Pfizer and Allergan, had provisions that targeted a specific feature of their agreement and prompted both parties to walk away from what would have been the second-largest deal of all time.  The move by the Obama administration to change the rules has sent a chilling message to dealmakers and comes on top of a number of legal challenges to big transactions such as Halliburton Co’s takeover of rival oil services company Baker Hughes Inc. on antitrust grounds.

Justice Dept. Sues to Block Halliburton-Baker Hughes Merger.  The U.S. Department of Justice is suing to block the pending merger of Halliburton and Baker Hughes, the latest instance of the Obama administration taking a tougher stance on big-ticket deals.  In its lawsuit, filed in federal court in Delaware, the Justice Department is arguing that combining the two oil field services companies would cut competition in the industry to unacceptable levels.  “The proposed deal between Halliburton and Baker Hughes would eliminate vital competition, skew energy markets and harm American consumers,” Attorney General Loretta E. Lynch said in a statement.

EU cuts SocGen antitrust fine by about half to 227.7 mln euros.  European Union antitrust regulators have cut Societe Generale’s rate-rigging fine by 49 percent to 227.72 million euros ($259.24 million) after the French lender recalculated the value of its sales.  France’s second-largest bank was hit with a fine of 446 million euros in December 2013, one of seven banks charged with rigging the euro interbank offered rate (Euribor) as a cartel.  “The amended fine is based on the amended value of sales data provided by Societe Generale in February 2016 after the bank realised that it had initially provided incorrect data to the Commission,” the European Commission said in a statement.

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