If the increasingly stringent approach of the DOJ & FTC wasn’t enough to convince dealmakers of the need to pay close attention to antitrust compliance, a recent 4th Circuit decision may do the trick. In Steves and Sons v. Jeld-Wen, (4th Cir.; 2/21), the Court affirmed a lower court’s decision to order a divestiture of assets acquired in a deal that closed almost a decade ago!
That would be an interesting result even if the action was brought by regulators – but it wasn’t. As this Nixon Peabody memo explains, the lawsuit involved a private plaintiff:
Jeld-Wen, CMI, and another competitor, were the three makers of “doorskins,” an outer layer for molded doors. The three firms sold the doorskins to independent door makers—such as Steves— and also to finish their own molded doors. In October 2012, following the closing of a U.S. Department of Justice investigation, Jeld-Wen and CMI merged. The Department of Justice
investigated the merger again in early 2016, and again took no action. In July 2016, almost four years after the merger, Steves sued Jeld-Wen, contending the merger violated Section 7 of the Clayton Act, 15 U.S.C. § 18. A jury subsequently found for Steves, and the district court, among other things, ordered Jeld-Wen to divest the doorskins plant it had acquired from CMI.
On appeal, the defendant argued that divestiture was an improper remedy because, among other things, Steves had waited too long to bring its case. The 4th Circuit disagreed, and affirmed the lower court’s divestiture order. The memo points out that Jeld-Wen is the first case to order divestiture at the behest of a private plaintiff.
– John Jenkins