DealLawyers.com Blog

In a recent speech, Jonathan Kanter, the head of the DOJ’s Antitrust Division discussed his approach to merger remedies.  What did he have to say? Well, how can I put this – remember the scene in the movie “Diner” where Tim Daly’s character threatens someone trying to pick a fight by saying “I’ll hit you so hard I’ll kill your whole family?”  Kanter’s approach appears very similar to that. Check out this excerpt from Paul Weiss’s memo on the speech:

The head of the Antitrust Division of the Department of Justice (DOJ) said that when it “concludes that a merger is likely to lessen competition, in most situations” the division “should seek a simple injunction to block the transaction,” rather than agree to a remedy. He went on to add that while divestitures will be an option in certain circumstances, in his view “those circumstances are the exception, not the rule.” Mr. Kanter delivered his remarks at a virtual meeting of the Antitrust Section of the New York State Bar Association.

According to Mr. Kanter, divestitures may be viable solutions where “business units are sufficiently discrete and complete that disentangling them from the parent company in a non-dynamic market is a straightforward exercise.” However, Mr. Kanter suggested that companies with “evolving business models” operating in “innovative markets” may find increased resistance to a remedy if the DOJ determines that their deal presents competitive concerns.

This stance may lead to more merger challenges in the courts. Indeed, AAG Kanter welcomed the prospect of more litigation, saying that “settlements do not move the law forward.” Mr. Kanter went on to say that “we need new published opinions from courts that apply the law in modern markets in order to provide clarity to businesses” and that “this requires litigation that sets out the boundaries of the law as applied to current markets.” He said that the DOJ “need[s] to be willing to take risks and ask the courts to reconsider the application of old precedents to those markets.”

Whether the DOJ’s bite will match its bark over the long term remains to be seen – but there’s no denying that that’s quite a bark.

– John Jenkins