The Antitrust Division of the U.S. Department of Justice has given the green light to Swiss engineering giant ABB’s multi-billion-dollar acquisition of the American industrial motors firm Baldor Electric Co.

This regulatory approval paves the way for ABB’s $4.2 billion, or $63.50 per share, all-cash purchase.  The purchase price was a 41% premium over the November 29, 2010, $45.11 closing price of Baldor shares, the day ABB announced the $4.2 billon offer.  Since then, the management of both companies have approved the transaction. 

In general, hype surrounding ABB’s acquisition of Baldor has been positive.  Leading up to the takeover, leaders of both companies touted business efficiencies of the combined company, how Baldor as an ABB subsidiary would not be laying its U.S. workforce, and how the premium share price paid by ABB to acquire Baldor has the potential of making millionaires of many Baldor employees overnight.  Despite the fanfare, the companies’ path to the deal did face obstacles.  In particular, the scruples of both companies were assailed.  In the end, however, either the attacks lacked substance or the attackers couldn’t withstand the companies’ willingness to settle with anyone who might get in the way of their deal. 

In recent years, ABB has been on an acquisition bender.  Baldor is the seventh – and largest – company ABB has acquired since May 2008.

Though U.S. antitrust regulators green-lighted ABB’s acquisition of Baldor with minimal consternation, ABB’s dealings have kept other U.S. regulators busy.  On September 29, 2010, while ABB and Baldor were engaged in merger talks, the SEC announced that it had filed a “settled civil action” against ABB, charging the company with violations of the Foreign Corrupt Practices Act.  Specifically, the SEC alleged that ABB 1) bribed Mexican officials to obtain business with government-owned power companies; and 2) paid kickbacks to the former regime in Iraq to obtain contracts under the U.N. Oil for Food program.   According to the SEC, the bribery in Mexico resulted in contracts that generated $90 million in revenues and $13 million in profits for ABB, while the Iraqi kickbacks resulted in contracts that generated $13.5 million in revenues and $3.8 million in profits. 

Without admitting the allegations, ABB settled with the SEC for $39.3 million.  In related criminal proceedings, ABB reached a settlement with the Department of Justice to pay $19 million in criminal penalties. click here for more »

The FTC has voted unanimously to approve a Federal Register notice announcing revised thresholds for the Hart-Scott-Rodino Antitrust Improvements Act.

The Hart-Scott-Rodino Act requires persons contemplating certain large mergers or acquisitions to notify the FTC and the Assistant Attorney General, and to wait a designated period of time before consummating such transactions.  The threshold for reporting proposed mergers and acquisitions decreased from $65.2 million to $63.4 million.  Several additional thresholds were also revised and can be found in the notice.

The revised thresholds will apply to all transactions that close on or after the effective date of the notice.  According to an FTC press release, the notice will be published in the Federal Register shortly and will become effective 30 days after publication.

The FTC also unanimously approved a Federal Register notice announcing revised thresholds that trigger the prohibition on interlocking directorates under Section 8 of the Clayton Act.  The new thresholds are $25,841,000 for Section 8(a)(1) and $2,584,100 for Section 8(a)(2)(A).  According to the FTC press release, the notice will be published in the Federal Register shortly and will become effective upon publication.

The Clayton Act requires that these thresholds be revised annually by the FTC based on the change in gross national product.

The U.S. Department of Justice’s crusade against anticompetitive employment practices at high-tech companies continues, this time with a settlement with Lucasfilm Ltd.

In a complaint filed with the settlement in federal district court in Washington, D.C., the DOJ alleges that Lucasfilm agreed with Walt Disney’s animation studio, Pixar, as far back as 2005, that neither company would solicit each other’s employees for hire, both companies would give notice before hiring employees away from each other, and in cases where offers were made to each other’s employees, neither would make a higher counteroffer. 

Earlier last year, the DOJ reached settlements with six other high-tech companies – Pixar, Apple, Google, Adobe Systems, Intel, and Intuit – that bars them from entering into anticompetitive agreements to not solicit each other’s employees.  Because the earlier settlement will prevent Pixar from entering into anticompetitive employment agreements, the DOJ announced that its recent complaint did not need to name Pixar as a defendant.

Under the proposed final judgment, which if approved by the court would be in effect for five years, Lucasfilm would be barred from entering into anticompetitive hiring agreements and would engage in affirmative steps to ensure compliance with the settlement. 

This is not the first time these two firms’ names have appeared together; Lucasfilm and Pixar have enjoyed a relatively long history.  Pixar was established after Apple’s Steve Jobs purchased the computer graphics division of Lucasfilm in 1986 and renamed it Pixar.

The federal transportation agency that oversees regulation of railroads is looking for ways to unplug bottlenecks that may be blocking competition on U.S. railways.

The U.S. Surface Transportation Board (“STB”) has issued a notice that it “will receive comments and hold a public hearing to explore the current state of competition in the railroad industry and possible policy alternatives to facilitate more competition, where appropriate.”

The Board is seeking written comments prior to a hearing addressing the legal, factual, and policy matters described in the notice, including whether the STB should amend its earlier decisions concerning so-called “bottleneck carriers.”  A rail bottleneck rate issue arises “when more than one railroad can provide service over at least a portion of the movement of a shipper’s goods from an origin to a destination, but where either the origin or destination is served by only one carrier, i.e., the bottleneck carrier.”

Under the current rules, a shipper cannot routinely force a bottleneck carrier capable of providing origin-to-destination rail service to quote separate prices for different portions of the route.  According to the STB, shippers do this so they can use a different carrier for those portions of the route served by non-bottleneck carriers.

The STB will also consider changing its rules on terminal facilities access and reciprocal switching agreements.

The STB noted that it has not recently examined these issues, and that the railroad industry has changed dramatically since the STB initially adopted its competitive access standards in the 1980s.  Further, it noted that while productivity gains in the railroad sector “appear to be diminishing,” overall rail transportation prices have increased since 2004, suggesting that it is time for the STB to consider competition issues again.

The European Commission has fined five manufacturers of liquid crystal display (“LCD”) panels a total of 649 million euros (approximately US$ 860 million) for participating in a price-fixing conspiracy between October 2001 and February 2006.

LCD panels are the main component of the flat screens used in televisions, laptop computers and desktop computer monitors. 

In a press release, the Commission stated that the LCD panel manufacturers operated a cartel which not only agreed on prices but also exchanged information on future production planning, capacity utilization, and commercial conditions.  They were found to have violated Article 101 of the EU treaty, which prohibits price-fixing and other restrictions of competition. 

Four of the firms fined by the Commission are Taiwanese corporations: Chimei InnoLux (300 million euros), AU Optronics (117 million euros), Chunghwa Picture Tubes (9 million euros), and HannStar Display (8 million euros).

The South Korean based Samsung Electronics was found to have participated in the conspiracy but escaped being fined.  The company received full immunity under the Commission’s leniency program for having brought the cartel to the Commission’s attention and helping prove the infringement.

LG Display, also of South Korea, was ordered to pay 215 million euros.  However, LG escaped a significantly greater fine.  Its fine for the 2001-2005 period was reduced by 50% because it was “second in the door” in applying to the Commission for leniency.  In addition, it was not fined for 2006 because it was the first to inform the Commission that the cartel had continued after 2005.   click here for more »