• On October 18, the DOJ announced a settlement in connection with Cal Dive International’s acquisition of assets from Stolt Offshore, Inc., which requires Cal Dive to make certain divestitures to preserve competition in the market for saturation diving services in the U.S. Gulf of Mexico. According to the DOJ’s complaint, Cal Dive and Stolt are two of only three major providers of saturation diving services in the Gulf. The proposed transaction would have eliminated Stolt as a competitor and given Cal Dive more than half of the capacity in the market. Under the terms of the proposed consent decree, Cal Dive must divest two vessels and a separate saturation diving system.
  • On October 25, the Sixth Circuit reversed the District Court’s grant of summary judgment in favor of defendant Dairy Farmers of America, Inc. (“DFA”) in the DOJ’s challenge to DFA’s partial acquisition of Southern Belle Diary Co. The Sixth Circuit held that the district court was required to rule on the legality of the parties’ original agreement because defendants had not met their burden of demonstrating that such a claim was moot. In assessing the partial acquisition claim, the Sixth Circuit explicitly rejected the lower court’s conclusion that a lack of control or influence precludes a Section 7 violation, and held that the government had presented sufficient evidence to raise a genuine issue of material fact regarding whether DFA’s acquisition of Southern Belle violated Section 7 under both the original and revised agreements. The key proposition is that a 50% passive ownership interest in a competitor may raise anticompetitive concerns even if the passive interest has no voting rights. Here, even though the partial acquisition does not give the buyer control, the Sixth Circuit ruled that the government should be able to show evidence that the aligned interests between the DFA and Southern Belle could result in anticompetitive effects.
  • On October 27, the DOJ approved the SBC/AT&T and Verizon/MCI mergers after SBC and Verizon each agreed to divest connections to more than 350 buildings in their respective territories in order to remedy the Division’s concerns about competition for certain business customers. The DOJ’s press release highlights the agency’s conclusion that, other than limited divestitures in various markets, the transactions were procompetitive and promised “exceptionally large merger-specific efficiencies.”

Authored by:
Andre P. Barlow