Today, the European Commission conditionally cleared a $1.76 billion (1.2 billion euro) acquisition by Unilever, an Anglo-Dutch company, of the Sara Lee Corporation household and body care division.  The clearance required a divestiture of Sara Lee’s Sanex brand and other related business in Europe due to a concern about anticompetitiveness in certain deodorant markets. 

“We had to ensure that the transaction would not lead to increased prices for consumers,” said Joaquín Almunia, the EC Vice President of Competition Policy.  “As Unilever offered a strong and clear-cut remedy to address the competition concerns in a number of deodorant markets, the Commission was able to clear the merger.” 

The investigation into the potential merger lasted five months, and the EC noted that Unilever had a “particularly strong” position in the European deodorant market due to its Axe, Dove, and Rexona brands.  The EC was particularly concerned about the merger’s possible effects on deodorant markets in Belgium, the Netherlands, Denmark, Ireland, Spain, Portugal and the United Kingdom. 

The EC noted that the merger could “remove an important competitive force and would likely have led to price increases.”  Thus, the Commission concluded that the divestiture of the Sara Lee Sanex brand and related business in Europe “offers a clear and workable remedy, sufficient to restore competition in all markets where the Commission had concerns.”   Unilever employs 163,000 people worldwide and sells a range of products that includes cosmetics, food, tea, and other goods.  Sara Lee employs 33,000 people worldwide and sells products that include, among other things, packaged food products, shoe polish, deodorant, and other products.

The parties notified the Commission of the proposed merger on April 21, 2010, and the Commission opened an investigation into it on May 31, 2010.

The potential acquisition of telecommunication company Qwest by Internet provider CenturyLink has cleared another hurdle.  Integra, a competitive local exchange carrier that both uses and resells Qwest network services, had fought the proposed deal because of the potential effects on its existing connectivity agreements with Qwest.  However, with a settlement agreement in place that ensures its rights under those prior contracts, Integra dropped its opposition to the deal.

The merger deal, valued at more than $22 billion, would create one of the largest telecommunications companies in the United States, with an extensive broadband network as well as landline telephone and wireless networks.  Because the combined company would present a formidable competitive force, many competitors still oppose the deal, such as the wireless carrier Sprint and other local exchange carriers. 

Whether the Integra settlement agreement will act as template for future agreements remains to be seen.  The settlement agreement contains a number of concessions to Integra, including a guarantee that the combined company will not pass on merger expenses to Integra, a guarantee that Integra can prevent Qwest from making certain types of changes to its network, and the right for Integra to inquire into any deteriorations in Qwest network services. 

The merger must also be approved by both the Federal Communications Commission and several state regulators.  The Department of Justice and the Federal Trade Commission do not oppose the merger.

For the second time in as many years, antitrust enforcers have blocked a proposed deal between mining companies BHP Billiton Ltd. and Rio Tinto Ltd. to create the world’s largest iron-ore exporter.

The companies have announced that they will not proceed with a $10 billion joint venture of their ire ore operations in western Australia, due to objections from antitrust agencies in Australia, Germany, Japan, and Korea.  BHP Billiton and Rio Tinto are two of the world’s three largest producers of iron ore.  The joint venture would have combined mining and transportation assets in the Pilbara region of Australia.

Germany and Japan led the charge against the joint venture.  Both Japan and Germany, announced on Oct. 14, 2010, that they would prohibit the joint venture.  Further, the European Union was planning to begin its own investigation of the joint venture. 

In 2008, BHP sought to acquire Rio Tinto for $66 billion, but the EU blocked that deal as well.

A worldwide antitrust crackdown on scrap metal cartels has landed in Korea with the Korean Fair Trade Commission’s recent imposition of a $1.45 million fine against 25 scrap metal processors for price fixing.

Scrap metal processors purchase the scraps that are produced by the steel production process.  The processors in turn sort and clean the scrap metal and sell the final product to end users, frequently other steel mills.  Because of its enforcement action, the Korean Commission expects prices paid by end users to fall in the near future.

The scrap metal industry has also been the focus of antitrust claims in the United States. For example, the Court of Appeals for the Sixth Circuit upheld a $23 million jury award against three scrap metal processors in 2008.  Plaintiffs in that case, In re Scrap Metal Antitrust Litigation, accused the defendants of bid rigging and market allocation, among other charges.  The U.S. Department of Justice also brought criminal charges against two scrap metal dealers for price fixing, but the companies were acquitted in 2009.

Korea and the United States are not alone in closely scrutinizing the scrap metal industry.  Earlier this year, South Africa’s Competition Commission announced it was referring an investigation into 13 scrap metal processors to its Competition Tribunal.  The decision concerns various charges, including price fixing, market allocation, and bid rigging.  The referral followed a four-year investigation into the South African scrap metal industry.

The United Kingdom’s two antitrust agencies will be merged if a proposed consolidation that seeks to streamline the British regulatory process passes its own merger review by the government.

Currently, the U.K. employs two regulatory bodies to scrutinize competition activity, the Office of Fair Trading (“OFT”) and the Competition Commission.  The two bodies have slightly different roles, but work together in the clearance of mergers and in investigating allegedly anticompetitive conduct.

The U.K. government is considering merging the two bodies in the interest of enhancing efficiency and accountability in the scrutiny of merger deals, which can take longer to clear in the U.K. than in other jurisdictions.

The OFT has the authority to investigate cartels, while the Competition Commission leads investigations in alleged market dominance.  Typically, the OFT will conduct initial investigations in the scrutiny of merger deals in the U.K., and it will pass the investigation onto the Competition Commission if it has any concerns with the deal.

Unlike in the United States, where the antitrust regulators (the Federal Trade Commission and the Department of Justice) have to convince courts of the merits of blocking a merger, the U.K. grants its regulatory agencies the final word on merger clearance.

The U.K. has stated it will make a final decision on the proposed plan in 2011 after seeking public comments.

The idea of merging the agencies has drawn mixed reactions.  Some applaud the increased efficiency of having one agency conducting the merger process and competition oversight, while others fear that such an agency merger may undermine the quality of the oversight process. 

Alec Burnside, a competition partner at Linklaters LLP, cautioned that “[t]he challenge will be to make sure there is somehow still a ‘fresh pair of eyes.’”  He noted the possible danger of having one agency with all the antitrust power in that it might be “judge, jury, and executioner.”  However, he added that “the argument for a merger is compelling in its own way, and there may be other ways of ensuring the right checks and balances.”  Other competition lawyers in the U.K. have expressed the view that from cutting down the number of regulators will promote efficiency. 

The U.K. business community appears to favor the idea.  The Confederation of British Industry believes it would expedite the merger review and investigation processes, thus “reducing the time firms are left in limbo.”