• On September 8, 2005 ScanSoft, Inc. and Nuance Communications, Inc. announced that the DOJ has granted termination of the antitrust waiting period under the HSR Act for the proposed merger of Nuance with ScanSoft. The DOJ seriously investigated the merger of the combination of ScanSoft and Nuance that brings together the industry’s most comprehensive portfolio of speech applications, technologies and expertise that will enable customers to deploy innovative speech-based solutions. The DOJ allowed the waiting period to close without requiring any conditions.

• On August 17, the Antitrust Division announced that the South Dakota Real Estate Commission, in response to an investigation by the Antitrust Division, rescinded two rulings that prohibited South Dakota real estate brokers from offering rebates, inducements, and other discounts to consumers. The Commission advised the Department of its action in a letter. The Commission voted unanimously, on June 30, 2005, to repeal, cancel, and nullify the Commission’s Declaratory Rulings 93-1 and 03-01. Subsequently, the Commission notified all South Dakota real estate brokers that they now are free to offer commission rebates, incentives, and other discounts to buyers and sellers. In its letter, the Commission assured the Division that the “South Dakota Real Estate Commission will refrain from instituting any kind of prohibition that would ban licensees from offering rebates and inducements.” The Antitrust Division has been investigating the Commission’s rulings, which prevented South Dakota brokers from competing with each other for buyers and sellers of real estate services by offering rebates, discounts, and other incentives since June 2005.

• On August 10, two former top executives of Bayer AG, the German chemicals producer, were indicted by a federal grand jury for participating in an international price-fixing conspiracy in the rubber chemicals industry. Mr. Ick, former head of Bayer’s Rubber Business Group, was charged with participating in the conspiracy from 1995 to 2001. Mr. Monn, former head of marketing of Bayer’s Rubber Business Group, was charged with joining the conspiracy in or about January 1997. Both Mr. Ick and Mr. Monn are German citizens. More than $200 million in criminal fines have resulted from the Antitrust Division’s ongoing investigations of price fixing of various rubber-related products. Over the past 18 months the Division has obtained guilty pleas from five companies–Bayer AG, Syndial S.p.A., Crompton Corporation, DuPont Dow Elastomers, Zeon Chemicals–and including today’s charges, a total of six executives. The charges stem from an ongoing investigation being conducted by the Antitrust Division’s San Francisco Field Office and the FBI in San Francisco.

• On August 3, the Antitrust Division announced the closing of its investigation into Sprint Corporation’s proposed acquisition of Nextel Communications Inc. without requiring any divestitures. Although the Division did not challenge this merger, it required divestitures in the recent ALLTEL-Western Wireless and Cingular Wireless-AT&T Wireless mergers. The Division focused its investigation on mobile wireless telecommunications services that Sprint and Nextel currently offer, as well as on developing products such as advanced wireless broadband services where the companies are potential competitors. The Division concluded that none of the theories of competitive harm that the Division considered were ultimately supported by the facts. In analyzing mobile wireless voice and data services, the Division examined the extent to which Sprint and Nextel compete for the sale of such services in many areas throughout the United States. The Division found no substantial proof that the merged company could unilaterally exercise market power postmerger or that there likely would be competitive harm from coordinated interaction among the merged company and other remaining providers. The Division focused its investigation on local and regional markets, because customers purchasing mobile wireless telecommunications services choose among providers that offer such services where they are located and travel on a regular basis: home, work, other areas they commonly visit, and areas in between. The number and identity of mobile wireless telecommunications services providers varies among geographic areas, as does the quality of their services and the breadth of their geographic coverage, all of which are significant factors in customers’ purchasing decisions. To evaluate the transaction, the Division examined the shares of the two carriers, how closely positioned the two carriers’ offerings are in depth and breadth of coverage, the service features they offer (including push-to-talk services), and local network quality. The Division also looked at evidence related to the choices customers make in the marketplace. Based on the extensive evidence collected, the Division concluded that the merged company could not unilaterally exercise market power.

Authored by:
Andre P. Barlow
202-218-0026
abarlow@sheppardmullin.com