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Merger Antitrust Law (2019)

Dale Collins
Georgetown University Law Center

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    I

 

This page contains the memorandum introducing the course, class schedule, reading materials, and class notes for the Merger Antitrust Law course taught during the 2019 fall semester at Georgetown. It also contains links to related supplemental materials on the Applied Antitrust web site. There is no textbook for this course. Everything you need will be linked to this page.

Memorandum introducing the course

Class schedule 2.1 (revised November 4, 2019)

2019ma_class_schedule1_02019
 
 
Required Reading
Comments and Optional Reading

Unit 1

Introduction to Merger Antitrust Law: Substance and Process

Unit 1 class slides (this collects all of the slides used in class for Unit 1 from Classes 1 and 2)

Class 1

Tuesday, September 3

Introduction
TransDigm/Takata

Memorandum introducing the course

Class schedule

Class 1 reading guidance

Unit 1 reading materials

Merger Antitrust Law: Introduction to Substance and Process (class notes)

Class 1 homework assignment

Antitrust Law: Hornbooks and Other Antitrust Study Aids

Demand curves and consumer surplus (YouTube videos):

Marginal Revolution University, The Demand Curve

Marginal Revolution University, A Deeper Look at the Demand Curve

Marginal Revolution University, What Is Deadweight Loss?

 

Class 1 class slides (first half of Unit 1) (as used in class)

Unit 2

Predicting Merger Antitrust Enforcement Challenges

Unit 2 class slides

Class 2

Thursday, September 5

Predicting merger antitrust enforcement challenges
DOJ/FTC 2010 Horizontal Merger Guidelines

Class 2 reading guidance

Unit 2 reading materials

Predicting Merger Antitrust Enforcement Challenges (class notes)

Class 2 homework assignment

Class 2 slides (second half of Unit 1 + first half of Unit 2) (as used in class)

U.S. Dep't of Justice & Fed. Trade Comm'n, Horizontal Merger Guidelines (rev. Aug. 19, 2010)

 

Unit 3

The DOJ/FTC Merger Review Process

Unit 3 class slides

DOJ and FTC, Annual Report to Congress for Fiscal Year 2018

For additional supplemental materials, see 13. DOJ/FTC Merger Review and Settlement Procedures in AppliedAntitrust.com

Class 3

Tuesday, September 10

Premerger notification

Class 3-4 reading guidance

Unit 3 reading materials

The DOJ/FTC Merger Review Process (class notes)

Class 3 homework assignment

Instructor's answer

Albertsons/Safeway case study (complete)

Class 3 slides (second half of Unit 2 + first half of Unit 3) (as used in class)


Class 4

Thursday, September 12

Investigations

Same materials as for Class 3

Class 4 homework assignment

Instructor's answer

Class 4 slides (second half of Unit 3) (as used in class)

DOJ Model Second Request (Nov. 28, 2016)

FTC Model Second Request (August 2015)

Makan Delrahim, It Takes Two:Modernizing the Merger Review Process, Prepared Remarks Before the 2018 Global Antitrust Enforcement Symposium, Washington, DC (Sept. 25, 2018)

Unit 4

Merger Antitrust Litigation

Unit 4 class slides

For additional supplemental materials, see 14. Merger Antitrust Litigation in AppliedAntitrust.com

Class 5

Tuesday, September 17

Class 5 reading guidance

Unit 4 reading materials

Merger Antitrust Litigation (class notes)

Class 5 homework assignment

Class 5 slides (same as Unit 4 slides)

T-Mobile/Sprint Case Study: Introduction and the States' Complaint

T-Mobile/Sprint: An Introduction to the Deal (class slides)

Redacted Second Amended Complaint (Aug. 15, 2019)

Joint Civil Case Management Plan and Scheduling Order (Aug. 20, 2019)

For more materials on T-Mobile/Sprint merger, click here

Unit 5

Settlements

 

Unit 5 class slides

For additional supplemental materials, see DOJ/FTC Merger Review and Settlement Procedures in AppliedAntitrust.com

Class 6

Thursday, September 19

Class 6 reading guidance

Unit 5 reading materials

Merger Antitrust Settlements (class notes)

There is no homework assignment for this class

Class 6 slides (same as Unit 5 slides)

Albertsons/Safeway case study (complete)
TransDigm/Takata case study (complete)

Agency materials: FTC

Fed. Trade Comm'n, The FTC’s Merger Remedies 2006-2012: A Report of the Bureaus of Competition and Economics (Jan. 2017) (FTC news release)

Dan Ducore & Naomi Licker, Bureau of Competition, Fed. Trade Comm'n, Looking Back (Again) at FTC Merger Remedies (Feb. 3, 2017)

Fed. Trade Comm'n, Bur. of Competition, Frequently Asked Questions About Merger Consent Order Provisions (downloaded August 8, 2019)

Deborah L. Feinstein, Dir., Bureau of Competition, Fed. Trade Comm'n, The Significance of Consent Orders in the Federal Trade Commission’s Competition Enforcement Efforts (Sept. 17, 2013)

Agency materials: DOJ

Makan Delrahim,Ass't Att'y Gen., U.S. Dep't f Justice, Antitrust Div., Improving the Antitrust Consensus, Prepared Remarks Before the New York State Bar Association Antitrust Section, New York, NY (Jan. 25, 2018)

U.S. Dep't of Justice, Antitrust Div., Antitrust Division Manual Ch. 4 D: Negotiating and Entering Consent Decrees (5th ed. updated Mar. 2014)

U.S. Dep't of Justice, Antitrust Div., Antitrust Division Policy Guide to Merger Remedies (rev. June 2011) (news release)

Other materials

Jonathan M. Jacobson, Issues in Antitrust Consent Decrees, Presented to the Department of Justice Antitrust Division (Apr. 26, 2018)

Unit 6

A Case Study Problem: Walgreens/Rite Aid

Unit 6 class slides

Class 7

Tuesday, September 24

 

Class 7 reading guidance

Unit 6 reading materials

There are no class notes for this class. Spend your time working on the homework problem.

Class 7 homework assignment

Instructor's answer

Class 7 slides (same as Unit 6 slides)

Walgreens Boots Alliance, Inc., Form 8-K (filed Oct. 29, 2015) (containing merger agreement)

Some additional background on the original transaction

± Dana Mattioli, Michael Siconolfi & Dana Cimilluca, Walgreens, Rite Aid Unite to Create Drugstore Giant, Wall St. J., Oct. 27, 2015.

± Michael J. de la Merced & Hiroko Tabuchi, Walgreens to Buy Rite Aid for $9.4 Billion, N.Y. Times DealB%k, Oct. 27, 2015.

Unit 7

Hertz/Avis Budget/Dollar Thrifty

Unit 7 slides

For a more complete collection of primary sources and commentary on the Hertz/Avis Budget/Dollar Thrifty machinations than in the reading materials, including press releases, investor presentations, SEC filings, background information, and commentary, click here.

Class 8

Thursday, September 26

The 2010 Hertz/Dollar Thrifty deal

 

Class 8 reading guidance

Unit 7 reading materials

There are no class notes for this class

Class 8 homework assignment

Instructor's answer

Class 8 slides

YouTube videos

Present value

Present value of an annuity

Present value of a perpetuity (perpetual annuity)

Weighted average cost of capital (WACC)

Class 9

Tuesday, October 1

Antitrust considerations and the merger agreement

Class 9 reading guidance

Unit 7 reading materials

Allocating Antitrust Risk in Merger Agreements (class notes)

Class 9 homework assignment

Instructor's answer

Class 9 slides

For a collection of antitrust-related provisions appearing in merger agreements, see Dale Collins, Sample Antitrust-Related Provisions in M&A Agreements, AntitrustUnpacked.com (July 2, 2018)

Class 10

Thursday, October 3

The merger agreement (con't)
The bidding war with Avis
FTC review and settlement
Aftermath

 

Class 10 reading guidance

Unit 7 reading materials

Review Allocating Antitrust Risk in Merger Agreements (class notes) as necessary

There are no additional class notes for this class

Class 10 homework assignment

I included my answer in my response to the Class 9 homework assignment

Class 10 slides

For a collection on SEC materials and press releases on the bidding war for Dollar Thrifty between Hertz and Avis Budget, click here.

Unit 8

Competition Economics

 

Class 11

Tuesday, October 8

Part 1. Demand, Costs, and Profits

 

Class 11 reading guidance

Basic Competition Economics Part 1 (class notes)
(rev. Oct. 5, 2019)

There are no reading materials for this class

Class 11 homework assignment

Instructor's answer

What You Really Need to Know (Part 1)

A Marginal Revenue Problem Step-by-Step (by Step)

A Profit-Maximization Problem Step-by-Step (by Step)

Dennis W. Carlton & Jeffrey M. Perloff, Modern Industrial Organization (4th ed. 2005).

See also Dave Berry, Up in the Air on the Question of Gravity, Baltimore Sun, Mar. 16, 1997, at 3J

YouTube videos

Marginal Revolution University, The Demand Curve

Marginal Revolution University, A Deeper Look at the Demand Curve

Marginal Revolution University, The Demand Curve Shifts

From Demand to Inverse Demand

Marginal Revenue for a Monopolist Facing Linear Demand

Finding a Revenue Function from a Linear Demand Function

Class 12

Thursday, October 10

Part 2. Markets and Market Equilibria

Class 12 reading guidance

Basic Competition Economics Part 2 (class notes)

There are no reading materials for this class

Class 12 homework assignment

Instructor's answer [To come]

What You Really Need to Know (Part 2) (rev. Oct. 17, 2019)

Added new slides 14-16 (on the relationship between elasticities and cross-elasticities)

Revised slides 38-47 (on the Cournot and Bertrand oligopoly models)

YouTube videos

How Substitutes and Complements Affect Demand

Marginal Revolution University, Elasticity of Demand

Marginal Revolution University, Calculating Elasticity of Demand

Marginal Revolution University, Elasticity and its Applications

Cross elasticity of demand

Calculating the Elasticity of Demand

Intuition for Monopoly and Elasticity

The Equilibrium Price and Quantity

Exploring Equilibrium

Introduction to the Competitive Firm

Maximizing Profit Under Competition

Maximizing Profit Under Monopoly

Monopoly Basics

The Monopoly Markup

Cournot Competition

Cournot oligopoly

Bertrand Competition

Cournot versus Bertrand Basics

 

Wednesday, October 16

Optional economics review session

 

Unit 9

Sanford Health/Mid Dakota Clinic

For a more on Sanford Health,Mid Dakota Clinic, including the briefs on the merits filed in the case and an audio recording of the oral argument in the Eight Circuit, click here.

Class 13

Thursday, October 17

Analysis of the Eight Circuit's opinion

Entry defense

Class 13 reading guidance

Unit 9 reading materials

Review U.S. Dep't of Justice & Fed. Trade Comm'n, Horizontal Merger Guidelines § 9 (rev. Aug. 19, 2010)

Sanford Health/Mid Dakota Clinic (class notes--distributed after class)

Class 13 homework assignment

Class 13-14 sides (not used in class but covers class materials) (rev. Oct. 23, 2019)

U.S. Dep't of Justice & Fed. Trade Comm'n, Horizontal Merger Guidelines (rev. Aug. 19, 2010)

YouTube videos

David Evans, Hypothetical Monopoly Test (SSNIP)

Superseded Merger Guidelines

U.S. Dep't of Justice & Fed. Trade Comm'n, Horizontal Merger Guidelines (Apr. 8, 1997)

U.S. Dep't of Justice, Merger Guidelines (June 14, 1984) (published at 49 Fed. Reg. 26,823)

U.S. Dep't of Justice, Merger Guidelines (June 14, 1982) (published at 47 Fed. Reg. 28,493)

Fed. Trade Comm'n, Statement Concerning Horizontal Merger Guidelines (June 14, 1982)

U.S. Dep't of Justice, Merger Guidelines (May 30, 1968)

Note: The 1968, 1982, 1984 (except for Section 4), 1992, and 1997 Merger Guidelines have been superseded by the 2010 Merger Guidelines. Section 4 of the 1984 Merger Guidelines, which addresses nonhorizontal mergers, remains technically in effect.

The Seminal Cases of the 1960s

  The common law approach to antitrust law 1
  United States v. E.I. du Pont de Nemours & Co. (1957) 4
  Brown Shoe Co. v. United States (1962 12
  United States v. Philadelphia National Bank (1963) 28
  United States v. Aluminum Co. of America (Rome Cable) (1964) 33
  United States v. Von’s Grocery Co. (1966) 36
  United States v. Pabst Brewing Co. (1966) 40
  United States v. General Dynamics Corp. (1974) 44

 

Unit 10

H&R Block/TaxACT

 

Unit 10 class slides
I have modified these slightly to make them a bit more complete

Class 14

Tuesday, October 22

Finish Sanford Heath/MDC

Begin H&R Block/TaxACT

Market definition

Class 14 reading guidance

Unit 10 reading materials

Market Definition (class notes) (rev. Oct. 21, 2019)

Class 14 homework assignment
(rev. October 23, 2019)

Instructor's answer

Generally

1 ABA Section of Antitrust Law, Antitrust Law Developments ch. 6 (8th ed. 2017) (market definition). This is the best complication of the current law on market definition. It is the first source to which you should turn if you have questions about how the courts apply the law.

± Serge Moresi, Steven C. Salop & John Woodbury, Market Definition in Merger Analysis (Feb. 9, 2017)

± Malcolm Coate & Jeffrey Fischer, Why Markets Matter for Evidence-Based Merger Analysis (Jan. 2010)

± Jonathan B. Baker, Market Definition: An Analytical Overview, 74 Antitrust L.J. 129 (2007).

± Jonathan B. Baker & Timothy F. Bresnahan, Economic Evidence in Antitrust: Defining Markets and Measuring Market Power (Stanford Law and Economics Olin Working Paper No. 328 Sept. 2006), final version published in Handbook of Antitrust Economics 1 (Paolo Buccirossi ed., 2008).

± Gregory J. Werden, The History of Antitrust Market Delineation, 76 Marquette L. Rev. 123 (1992).

H&R Block/TaxACT commentary

Marc Remer & Frederick R. Warren-Boulton, United States v. H&R Block: Market Definition in Court since the 2010 Merger Guidelines, 59 Antitrust Bull. 599 (2014).

± Malcolm B. Coate, Market Definition in Differentiated Goods When the Final Consumer Buys the Good: Insights from the H&R Block Case (Feb. 12, 2014).

± Joseph J. Simons & Malcolm B. Coate, Should DOJ’s Controversial Approach to Market Definition Control Merger Litigation, the Case of US v. H&R Block (Oct. 24, 2013).

± James A. Keyte, United States v. H&R Block: The DOJ Invokes Brown Shoe to Shed the Oracle Albatross, Antitrust, Spring 2012, at 32.

± Deborah Feinstein, The Significance of H&R Block: Brown Shoe Meets Merger Simulation, Antitrust, Spring 2012, at 5.

See generally AppliedAntitrust.com, Market Definition

Class 15

Thursday, October 24

Market definition

Class 15 reading guidance

Unit 10 reading materials

Market Definition (class notes)

Class 15 homework assignment

Instructor's answer

Class 15 slides

Critical loss analysis

± Joseph Farrell & Carl Shapiro, Improving Critical Loss Analysis, Antitrust Source, Feb. 2008.

± Michael Katz & Carl Shapiro, Further Thoughts on Critical Loss, Antitrust Source, Mar. 2004

± Michael Katz & Carl Shapiro, Critical Loss: Let’s Tell the Whole Story, Antitrust, Spring 2003

Daniel P. O’Brien & Abraham L. Wickelgren, A Critical Analysis of Critical Loss Analysis, 71 Antitrust L.J. 161 (2003)

± Oxera, "Could: or :Would"? The Difference between Two Hypothetical Monopolists (Nov. 2008)

± Serge Moresi & Hans Zenger, Recapture Ratios In Merger Analysis (Oct. 29, 2017).

See generally AppliedAntitrust.com, Market Definition

Class 16

Tuesday, October 29

Coordinated Effects

Class 16 reading guidance

Unit 10 reading materials

Anticompetitive Effects in Horizontal Mergers (class notes)

Class 16 homework assignment

Class 16 slides
Note: This deck contains a few new slides on diversion ratios. We will cover these in Class 17

1 ABA Section of Antitrust Law, Antitrust Law Developments 361-69 ch. 6 (8th ed. 2017) (identifying market participants; determining market share and concentration).

Coordinated effects

1 ABA Section of Antitrust Law, Antitrust Law Developments 369-72 (8th ed. 2017) (coordinated effects).

Janusz A. Ordover, Coordinated Effects, in 2 Issues In Competition Law and Policy 1359 (ABA Section of Antitrust Law 2008).

± Jonathan B. Baker, Mavericks, Mergers and Exclusion: Proving Coordinated Competitive Effects Under the Antitrust Laws, 77 N.Y.U.L. Rev. 135 (2002).

William J. Kolasky, Coordinated Effects in Merger Review: From Dead Frenchmen to Beautiful Minds and Mavericks, Prepared Remarks Before the ABA Section of Antitrust Law Spring Meeting Washington, DC (Apr. 24, 2002).

Oxera, The Ties that Bind: When Is Retaliation Effective and Credible for Tacit Collusion? (May 2008)

See generally AppliedAntitrust.com, Coordinated Effects

Class 17

Thursday, October 31

Unilateral effects

Class 17 reading guidance

Unit 10 reading materials

Anticompetitive Effects in Horizontal Mergers (class notes)

Class 17 homework assignment

Class 17 slides

Unilateral effects

1 ABA Section of Antitrust Law, Antitrust Law Developments 372-74 (8th ed. 2017) (unilateral effects).

youTube videos:

Howard Chang, Diversion Ratios

Richard Schmalensee, Upward Pricing Pressure Test

± Herbert Hovenkamp, Analyzing Horizontal Mergers: Unilateral Effects in Product-Differentiated Markets (2009)

Gregory J. Werden, Unilateral Competitive Effects of Horizontal Mergers I: Basic Concepts and Models, in 2 Issues In Competition Law and Policy 1319 (ABA Section of Antitrust Law 2008).

Gregory J. Werden & Luke M. Froeb, Unilateral Competitive Effects of Horizontal Mergers II: Auctions and Bargaining, in 2 Issues In Competition Law and Policy 1343 (ABA Section of Antitrust Law 2008).

± Carl Shapiro, Unilateral Effects Calculations (rev. Oct. 2010)

± Oxera, Unilateral Effects Analysis and Market Definition: Substitutes in Merger Cases? (June 2011)

± Serge Moresi & Hans Zenger, Aggregate Diversion and Market Elasticity (June 17, 2017)

± For a more detailed treatment of the use of diversion ratios in unilateral effects anlaysis than found in U.S. cases, see ± UK Office of Fair Trading, Anticipated Acquisition of the Online DVD Rental Subscription Business of Amazon Inc. by LOVEFiLM International Limited, No. ME/3534/08 (2008)

Class 18

Tuesday, November 5

Unilateral effects

Efficiencies defense

No additional materials

Review U.S. Dep't of Justice & Fed. Trade Comm'n, Horizontal Merger Guidelines § 10 (rev. Aug. 19, 2010)

Class 18 homework assignment (due Nov. 7)

Excel spreadsheet with market share data

Instructor's answer

Class 18 slides

 

Wednesday, November 6

Market definition

Optional review session

Optional review session class slides (revised Nov. 13, 2019)
NB: These slides update the original November 6 slides and include the topics from Class 20

Class 19

Thursday, November 7

Catchup and review of homework assignment

No additional reading

Class 18 homework assignment due

Class 19 slides

Unit 11

Sysco/U.S. Foods

 

Unit 11 slides
(same as Class 20 slides)

Class 20

Tuesday November 12

Analysis of the district court opinion

Targeted customers

Second price auction theory of unilateral effects

Power buyer defense

 

Class 20 reading guidance

Unit 11 reading materials

Review Market Definition and Anticompetitive Effects class notes as needed

Review U.S. Dep't of Justice & Fed. Trade Comm'n, Horizontal Merger Guidelines (rev. Aug. 19, 2010)

Section 3 (targeted customers and price discrimination)
Section 8 (powerful buyers)

Class 20 homework assignment

Class 20 slides

Gregory J. Werden, The Hypothetical Monopolist Test in Sysco: A Litigation Muddle Needing Analytic Clarity. 12 J. Competition L. & Econ. 341 (2016)

 

Wednesday, November 13

Anticompetitive effects

Downward-pricing pressure defenses

Optional review session

Optional review session class slides (revised Nov. 13, 2019)
NB: These slides update the November 6 slides and include the topics from Class 20

Unit 12

Staples/Office Depot

Unit 12 slides
(same as Class 21 slides)

Class 21

Thursday, November 14

Analysis of the district court opinion

Class 21 reading guidance

Unit 12 reading materials

Review Market Definition and Anticompetitive Effects class notes as needed

Class 21 homework assignment

Class 21 slides

Graded Homework Assignment

 
 

Posted Friday, November 15

Graded home assignment (rev. Nov. 16, 2019 11:30 am)
Due Tuesday, November 26

Excel spreadsheet (with market share tables)
(rev. Nov. 16, 2019 11:30 am)

 

Unit 13

Short Horizontal Cases

   

Class 22

Tuesday, November 19

Analysis of short case studies

ABI/Grupo Modelo

Heinz/Beech-Nut

Adobe/Aldus

There is no reading guidance for this unit

Unit 13A reading materials (required reading only)

Work on graded homework assignment

Class 22 slides

Cases covered in class

ABI/Grupo Modelo

Heinz/Beech-Nut

Adobe/Aldus

Class 23

Thursday, November 21

Analysis of short case studies

SGI/Alias/Wavefront

Energy Solutions/Waste Control Specialists
(failing company defense)

Dollar General/Dollar Tree/Family Dollar

Sirius/XM

Boston Scientific/CVIS

 

There is no reading guidance for this unit

Unit 13B reading materials (required reading only)

Work on graded homework assignment

 

Cases covered in class

SGI/Alias/Wavefront

Energy Solutions/Waste Control Specialists

Dollar General/Dollar Tree/Family Dollar

Sirius/XM

Boston Scientific/CVIS

Supplemental case studies

Halliburton/Baker Hughes

Abitibi/Bowater

Tronox/Cristal

Northwest/Continental

Continental/Delta

Unit 14

Potential Competition Mergers

 

Class 24

Tuesday, November 26

Mylan/Perrigo

Medtronic/Covidien

Mallinckrodt (Questcor)/Novartis

Steris/Synergy Health

Nielsen/Arbitron

Akron/VersaPharm

Graded homework assignment due before class

Class 24 reading guidance

Unit 14 reading materials

Potential competition mergers (class notes)

THERE IS NO HOMEWORK ASSIGNMENT FOR THIS CLASS

 

Unit 15 case materials (full set)

Mylan/Perrigo

Medtronic/Covidien

Mallinckrodt (Questcor)/Novartis

Steris/Synergy Health

Nielsen/Arbitron

Akron/VersaPharm

Unit 15

Vertical Mergers

   

Class 25

Tuesday, December 3

General Electric/Avio

Comcast/NBCUniversal

AT&T/Time Warner

There is no reading guidance for this unit. Read the class notes and the Unit 15 reading materials

Unit 15 reading materials

Vertical mergers (class notes)

THERE IS NO HOMEWORK ASSIGNMENT FOR THIS CLASS

Unit 16 complete case materials (optional)

Jonathan Sallet, Dep. Ass't Att'y Gen, U.S. Dep't of Justice, Antitrust Div., The Interesting Case of the Vertical Merger (Nov. 17, 2016)

D. Bruce Hoffman, Dir. Bur. of Competition, Fed. Trade Comm'n, Vertical Merger Enforcement at the FTC, Prepared Remarks Before the Credit Suisse 2018 Washington Perspectives Conference, Washington, D.C. (Jan. 10, 2018)

Steven C. Salop & Daniel P. Culley, Vertical Merger Enforcement Actions: 1994–July 2018 (2018)

Steven C. Salop, Invigorating Vertical Merger Enforcement (2018)

 

Wednesday, December 4

Optional review session

 

Class 26

Thursday, December 5

AT&T/Time Warner (con't)

Coca-Cola/Coca-Cola Enterprises

This is no additional reading for this class. We will finish the AT&T/Time Warner opinion and discuss anticompetitive vertical information conduits.

 

FINAL EXAM

   
 

Tuesday, December 10 –
Thursday, December 19

4-hour
Open book
Take home