DOJ Antitrust Highlights
Antitrust Division Allows Mittal's Bid for Arcelor to Proceed
Antitrust Division Asks for Microsoft Extension
Authored by:
Christopher Bowen
202-772-5384
cbowen@sheppardmullin.com
- On May 12, the Antitrust Division announced that it had reached a settlement with Mittal Steel which would allow it to continue its hostile bid for Arcelor. In January, Mittal, the largest steel manufacturer in the world, announced its hostile bid for Arcelor, the second largest steel manufacturer. Arcelor and its chairman, Guy Dolle, have fiercely resisted the hostile bid, arguing that the two companies have clashing corporate cultures and that Mittal would cut jobs in Europe after the acquisition. Guy Dolle also argued that the two companies concentrate on different varieties of steel, comparing Arcelor's steel to perfume and Mittal's steel to Eau de Cologne.
Prior to the hostile bid from Mittal, Arcelor had outbid ThyssenKrupp for Dofasco, one of Canada's top steel makers. Arcelor had made a final bid of C$71 per share, which ThyssenKrupp had decline to match. This had raised antitrust concerns for the Mittal deal, as Arcelor had a limited presence in the North American steel market prior to the acquisition of Dofasco, while Mittal is the largest steel manufacturer in the North America. Mittal had announced that it would divest Dofasco to ThyssenKrupp for C$68 per share if it bought Arcelor, but Arcelor had then attempted to make this impossible by attaching penalties to any divestiture of Dofasco.
As part of the deal with the Antitrust Division, Mittal agreed to allow the Division to continue to investigate the competitive implications of the acquisition of Arcelor. If the Division then finds that the acquisition would pose competitive problems, Mittal will divest Dofasco to ThyssenKrupp. If Mittal is unable to divest Dofasco, however, then Mittal will have to divest "certain alternative assets" to ThyssenKrupp or another buyer deemed acceptable by the Antitrust Division. Although not listed, the alternative assets would probably include current Mittal facilities specializing in the production of automobile steel, as that was the primary product overlap between Dofasco and Mittal.
The deal is intriguing for two reasons. First, the agreement establishes a remedy prior to establishing an antitrust problem, thus giving Mittal and Arcelor's shareholders some level of certainty as the hostile tender offer moves forward. Generally, the antitrust agencies will first investigate whether there is an antitrust problem before deciding upon a remedy. Second, it undoes the result of the sale of Dofasco, allowing ThyssenKrupp to obtain Dofasco at a discount to what Arcelor paid. This agreement, therefore, could serve as a useful model to future strategic buyers trying to purchase a rival through a hostile takeover.
Antitrust Division Asks for Microsoft Extension
- On May 12, the Antitrust Division filed a report asking Judge Colleen Kollar-Kotelly to extend the provisions of the Microsoft antitrust settlement agreement relating to technical documents. Under the settlement agreement, Microsoft is required to improve the documentation it provides to licensees of its products, specifically the details that programmers need to write programs that interact with the Windows operating system. In its prior reports filed as part of its Joint Status Report with Microsoft, the Division had noted that Microsoft was having trouble providing sufficient information for the licensees, a problem which could run the risk of violating the agreement. Microsoft had then proposed resetting its policies entirely, rather than amending them piecemeal as it had previously done. Although the Division agreed, it required an extension from 2007 to 2009 of those portions of the settlement agreement. In asking for the extension, the Division emphasized that "the request for an extension is not a result of any belief that Microsoft has willfully violated the final judgment."
Authored by:
Christopher Bowen
202-772-5384
cbowen@sheppardmullin.com
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