A View from Constantine Cannon’s London Office

By James Ashe-Taylor 

Less than a week after Britain’s vote to leave the European Union, it is becoming increasingly obvious that the vote to “Leave” has settled nothing.

This uncertainty was perhaps inevitable given that the referendum was fundamentally flawed. The Prime Minister should have delayed the process until the Leave supporters put forward a coherent, persuasive alternative to the status quo so that voters could then have been asked to choose between two clear alternatives.  Instead, the British people have voted against an existing system, but not in favour of something to replace it.  The result, not surprisingly, is enormous uncertainty.

The failure of the Leave Campaign to present a robust, practical alternative to EU membership during the Referendum debate was to be expected given that its leaders ranged from ideologues, who argued that leaving the EU would automatically improve Britain’s prospects (without giving any plausible explanation of how that would happen), to those who, more prosaically, sought only political advantage. The fact that all the major political parties were in favour of Remain meant that Brexit supporters could escape the discipline and responsibility normally to be found in the production of political manifestos.

As a result, no one knows precisely what the Leave vote means nor how the outcome of the Referendum will be given political effect.

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

Merging UK Firms Face More Costs, Bureaucracy with Brexit.  British companies planning mergers with EU peers will face more legal costs and regulatory hassles after Britain leaves the European Union as they will have to deal with two antitrust watchdogs, according to competition experts.  On the other hand, freed from strict EU state aid rules, Britain would have a free hand to prop up ailing companies such as steel producers if it chose to do so.  Britain’s vote to leave the EU could upset the current system, under which British competition rules are modeled on EU laws, and decisions by the country’s courts and tribunals must be consistent with the principles and judgments of the top EU courts in Luxembourg.

Anthem Faces Showdown with Antitrust Cops in Bid for Cigna.  Anthem Inc. and Cigna Corp. are preparing for a showdown with senior Justice Department officials in their effort to persuade the government to allow the health insurers to combine, lest they wind up dueling in court over a $1.85 billion breakup fee, according to sources.  This phase of a merger review can feel like a roller coaster ride, antitrust experts caution, with the outcome difficult to predict as companies jockey with enforcers in last-ditch meetings.

EU Regulators to Rule on $130 Billion Dow, DuPont Deal by July 28.  EU antitrust authorities will decide by July 28 whether to allow the $130 billion merger of U.S. chemical company Dow Chemical Co and its rival DuPont, one of several large agribusiness deals.  The companies requested approval on Wednesday, according to a filing on the European Commission website.

By James J. Kovacs

The loss of the Federal Trade Commission (“FTC”) in a hospital merger case in the U. S. District Court for the Northern District of Illinois last week highlights just how tricky defining a proper geographic market can be for antitrust enforcers these days.

Following a six day hearing, Judge Jorge Alonso denied a request by the FTC and the State of Illinois in FTC v. Advocate Health Care to preliminarily enjoin the proposed merger between Advocate Health Care Network and Advocate Health and Hospital Corporation (“Advocate”) and NorthShore University HealthSystem (“NorthShore”).  If permitted to merge, the combined entity, along with employing thousands of physicians and owning practice and outpatient sites, would control 15 hospitals in Illinois.

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Advocate-NorthShore Merger Delayed Again.  Advocate Health Care and NorthShore University HealthSystem face another delay over a merger they announced almost two years ago.  U.S. District Judge Jorge Alonso on Friday granted the Federal Trade Commission’s request to halt the proposed merger pending its appeal of the judge’s decision earlier this week that cleared the way for the deal to close.  On Tuesday, Judge Alonso, after a six-day hearing in April, said the FTC had not met its burden for a preliminary injunction. But he turned around Friday and granted an injunction after the commission said it would appeal his Tuesday ruling to a higher court.

Justice Department Should Analyze Dow-DuPont Deal: Senator.  The chairman of the U.S. Senate Judiciary Committee on Tuesday urged federal antitrust officials to conduct a “careful analysis” of Dow Chemical Co’s proposed $130 billion merger with DuPont, adding pressure on officials to scrutinize how rapid consolidation in agriculture will affect farmers and consumers.  U.S. Senator Charles Grassley called for the review in a letter to the U.S. Department of Justice’s antitrust division.  The Iowa Republican said he was concerned the planned tie-up will decrease competition in the farming sector following a flood of mergers and acquisitions in recent years.

Antitrust Cops Warn Merging Firms: Be Real.  The U.S. Department of Justice is sending a warning signal to health insurers, chemical companies and others seeking antitrust approval for big deals: Leave the dubious charts at home.  Antitrust lawyers for companies seeking approval for big mergers have for years bolstered their case by providing extensive economic analyses, often market by market, to show that the tie-ups wouldn’t stifle competition.  Justice Department officials are now saying they’re not going to be swayed in their analysis by impenetrable economic models.

HSBC to Pay $35 Million to Resolve Yen Libor Litigation in U.S.  HSBC Holdings Plc will pay $35 million to end private U.S. antitrust litigation claiming that it harmed investors by conspiring with other banks to manipulate the yen Libor and Euroyen Tibor benchmark interest rates.  Papers outlining the preliminary settlement were filed on Friday in the U.S. District Court in Manhattan.  Court approval is required.  The accord came four and one-half months after Citigroup Inc. reached a similar $23 million settlement, in what lawyers for the plaintiff investors called an “ice breaker” that might spur some of the roughly 20 other bank defendants to settle.

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

U.S. judge probes Uber over allegations of fraud in antitrust case. Uber must hand over documents to a federal judge probing whether private investigators hired by the ride-hailing company fraudulently sought information about its opponents in an antitrust case.  U.S. District court Judge Jed Rakoff in Manhattan is seeking to determine whether Uber instructed an investigator to lie in order to elicit information about Spencer Meyer, lead plaintiff in the antitrust lawsuit, and his attorney.  The suit, filed in December, alleges that Uber chief executive Travis Kalanick engaged in a price-fixing scheme with Uber drivers.  While the proposed class action names Kalanick and not the ride-hailing company, Uber is seeking to intervene in the lawsuit.

U.S. Files Antitrust Case Against North Carolina’s Largest Health System. North Carolina’s largest health system faces allegations that it quashed competition with demands that insurers not steer consumers to rivals, in the latest sign of antitrust scrutiny across the consolidating health-care sector.  The U.S. Department of Justice and North Carolina Attorney General Roy Cooper filed a civil antitrust case against Carolinas HealthCare System on Thursday, alleging the system used the market power of its 10 hospitals in and around Charlotte, N.C., to win concessions from commercial insurers that stifled competition on hospital price and quality.  According to the lawsuit, Employers and consumers pay more for health care as a result.

Glencore Must Face U.S. Lawsuit Over Zinc Prices. Two units of Anglo-Swiss mining company Glencore Plc must face a private antitrust lawsuit accusing them of trying to monopolize the market for special high grade zinc, driving up its price.  U.S. District Judge Katherine Forrest in Manhattan said zinc purchasers alleged “a plausible story of market control” by the Glencore units, Glencore Ltd and Pacorini Metals USA Inc, that violated the Sherman Act, a U.S. antitrust law.  In a 62-page decision, the judge also dismissed the purchasers’ claim that Glencore’s 2010 purchase of Pacorini was an illegal merger because its effect was to reduce competition.

Hutchison Seeks EU OK for Vimpelcom Deal With Concessions. CK Hutchison Holdings has offered to strengthen rivals such as Swisscom’s Fastweb in return for EU antitrust approval for its plan to merge its Italian mobile business with that of Vimpelcom, according to a source.  The European Commission said on Tuesday that Hutchison has offered concessions in a bid for EU approval of the deal.  Hutchison, controlled by Asia’s richest man, Li Ka-shing, put in its proposal last Monday, according to a filing on the commission’s website, without providing details.