While in Istanbul for a blockchain conference, we came across Matt Levine’s latest Money Stuff column, in which he observes the following about the Libor manipulation and anti-trust case:
It is fairly well established that a bunch of big banks manipulated the London Interbank Offered Rate, and that the dollar numbers attached to Libor manipulation are quite large, so a bunch of investors and plaintiffs’ lawyers got together a while back to sue the banks and get some of those dollars. One of their main theories was that the banks’ collusion to manipulate Libor was an antitrust conspiracy. But the district court threw out this theory, reasoning that it can’t be an antitrust conspiracy for the banks to get together and agree on Libor, because banks getting together to agree on Libor is just Libor. It can’t be illegal to do anticompetitive stuff with Libor, because Libor isn’t a competitive market; it’s “a cooperative endeavor,” so the fact that the banks cooperated in setting a false Libor, while it might be bad, can’t be an antitrust violation. I am not an antitrust expert but I found this interpretation clever, and fairly convincing.
We suggest watching this story…
It looks like EU competition regulators paid some unannounced visits to oil company offices around Europe on Tuesday — note the reason: Read more
William Baer, whose legal firm worked on AT&T’s bid for T-Mobile USA, is the White House’s prime candidate to head the Justice Department’s antitrust division, Bloomberg reports. Baer’s colleagues at Arnold & Porter counselled AT&T on its takeover plans, which were ultimately thwarted by the Justice Department. Baer’s background with the Federal Trade Commission might heal differences between the FTC and Justice on antitrust issues.
European regulators have narrowed down a list of concerns about Google’s business practices in the region, pushing their two-year probe into a new stage, the FT says. While the European Commission has still not decided on whether to launch a formal complaint or to file a “statement of objections”, officials are looking closely at Google’s ranking of search results to include its own services near the top. Eric Schmidt, Google’s executive chair, flies into Brussels this week to meet Joaquín Almunia, the competition commissioner, reports the NYT.
Eric Schmidt, chairman of Google, denied that the search company “cooked” its search results to gain an advantage over rivals, as he fended off persistent questioning during a Senate hearing into how Google wields its online power, the FT reports. However, his responses left some members of the US Senate’s antitrust subcommittee expressing frustration over how Google appeared to sidestep its own search algorithms to give prominence to its own online services, such as Maps and Finance. Asked by Herb Kohl, chairman of the subcommittee, if Google was a monopoly or had dominant power in search and other online markets – a status that would put it under special responsibility to avoid unfairly hurting competitors – Mr Schmidt said: “I would agree, senator, that we’re in that area … From our perspective, we see ourselves as having a special responsibility to debate all the issues that you are describing with us now.” A lawyer for the company, appearing later, denied that the comments amounted to an admission that Google was a monopoly.
The US Department of Justice has moved to block AT&T’s $39bn takeover of T-Mobile USA, threatening to unpick plans to unite the number two and number four US telecommunications operators in a deal that aimed to reshape the sector, the FT reports. In a lawsuit filed on Wednesday, the DoJ said the takeover would “substantially lessen competition for mobile wireless telecommunications services … resulting in higher prices, poorer quality services, fewer choices and fewer innovative products”. Bloomberg also reports that the antitrust challenge gives AT&T little recourse. See also FT Alphaville.
Wherein John McDermott and Cardiff Garcia try to understand the deal of the day and realise they should’ve gone to law school and become antitrust attorneys.
What just happened? Read more
The Department of Justice is set to lose Christine Varney, head of its antitrust division, to Cravath, Swaine & Moore, a leading M&A legal firm, says the FT. Under Varney, DoJ antitrust regulators were seen to have stepped up activity, having stymied in May the Nasdaq-ICE bid to take NYSE out of the hands of Deutsche Boerse, and put tough enforcement conditions on approved mergers, such as NBC-Comcast. The administration will try to find a pragmatist in Varney’s mould as it seeks to balance business and core supporters ahead of the 2012 election, according to the WSJ.
Christine Varney, head of the US Department of Justice’s antitrust division, is leaving the government to join Cravath, Swaine & Moore, a leading law firm known for its mergers and acquisitions work, the FT reports. Before her departure, Ms Varney had been leading efforts to reinvigorate US antitrust policy and enforcement. The department is examining several high-profile cases, including AT&T’s $39bn deal to buy T-Mobile USA, and was seen by practitioners to be ramping up activity. The timing of her departure – while unexpected in the department – was seen by some Washington insiders as practical because it is generally preferable for officials to leave an administration well before a general election.
A handful of the biggest US states has started antitrust investigations into Google, adding to the mounting regulatory pressure on the search company as federal authorities move closer to a full-blown inquiry of their own Attorneys-general in California, New York and Ohio have all recently begun reviews of the potential threat to online competition from Google’s search dominance, according to people familiar with the investigations. The FT reports that the moves come in the wake of an investigation launched last year by the Texas attorney-general’s office, which became the first regulator in the US to weigh in. The gathering regulatory clouds around Google in the US echo the mounting inquiries against Microsoft that began more than a decade ago. The first investigation into the software company was also launched by Texas, before a group of other states and the Department of Justice became involved.
The US justice department is considering a shake-up of the guidelines used in approving takeovers of US companies, pointing to a possible shift in antitrust policy under the Obama administration, the FT says. The DoJ is considering revising the so-called merger remedies guidelines to reflect developments in antitrust practice, said people with knowledge of the moves. The update is expected to include a greater discussion of behavioural or conduct remedies, which impose changes on how a business operates on an ongoing basis, they added.
Google’s dominance of the internet-search industry is being considered for a broad antitrust investigation by the US Federal Trade Commission, Bloomberg reports, citing two people familiar with the matter. The FTC is awaiting a decision by the Justice Department on whether it will challenge Google’s planned acquisition of ITA Software as a threat to competition in the travel-information search business, said the people. Separately, the FT says Google has sought to bolster its weak position in the smartphone industry’s patent wars, bidding $900m for a stack of patents put up for sale by Nortel, the bankrupt Canadian communications equipment maker. A criminal investigation has also been launched in the US into suspected privacy lapses in the applications that run on Apple and Google smartphones, the FT adds.
Microsoft has filed a formal complaint with European antitrust regulators about Google’s online search dominance in the region, according to the FT. While Microsoft and partner Yahoo have about a quarter of the US search market and Google the rest, Google has almost 95 per cent of the market in Europe, according to Microsoft’s general counsel Brad Smith, who cited data from regulators. Smith said in a Microsoft blog post that Google had obstructed Window Phones’ access to some of its sites and prevented advertisers from access to their own data. Google has consistently denied dominating the online search market and has contested individual allegations made against it.
Antitrust enforces have begun looking at rules announced by Apple this week allowing it to take a 30 per cent cut from publisher subscriptions made through its iPhones and iPads, people familiar with the matter have told the WSJ. Interest from the Justice Department and the Federal Trade Commission is at a ‘preliminary stage’ and might not develop into a formal probe, the sources added. Nevertheless, Apple has attracted attention on both sides of the Atlantic: European regulators said they were ‘carefully monitoring the situation’ on Thursday.
The Federal Trade Commission has given antitrust clearance for BHP Billiton to continue its $39bn hostile takeover bid for PotashCorp, Reuters reports – although it’s perhaps the easiest obstacle BHP has been facing recently. The Canadian fertiliser-maker’s shareholders present a much tougher hurdle to vault, with PotashCorp’s US shares trading at an 11 per cent premium to the offer as it currently stands from BHP — not to mention possible Chinese moves to construct a counter-bid. At the same time, another miner is moving closer to China, the FT says — Vale, the Brazilian mining giant, plans to list shares in Hong Kong as the company seeks closer ties with Chinese investors.
US regulators on Wednesday announced a settlement of charges against Intel that they said would go further in limiting the chipmaker’s anticompetitive conduct than earlier moves in Europe and Asia, reports the FT. The agreement marked the resolution of the most prominent antitrust case brought since the Obama administration took office, although the Federal Trade Commission, which brought the case, is an independent agency. Under the terms, the world’s largest chip maker has pledged to grant rivals access to its leading processor technology for six years, reports Reuters.
The European Commission has begun two investigations into IBM’s position in the market for mainframe computers, bringing back memories of the antitrust case faced by Microsoft on the continent, the NYT reports. Europe’s competition commissioner Joaquin Almunia is building on his predecessor’s work on Microsoft by focusing on the information technology sector. Mainframes are a central pillar of IBM’s business, with perhaps 40 per cent of operating profit related to the products, the FT adds.
Intel and the US Federal Trade Commission indicated on Monday they may soon reach an out-of-court settlement of their antitrust case, filing a a joint motion to suspend administrative trial proceedings until July 22, the FT reports. If agreement is accepted, it will head off a September trial that would have likely put the spotlight on Intel’s relationships with Dell, IBM and Hewlett Packard, the WSJ adds.
US authorities have signalled an interest in a potential antitrust probe into whether the software underpinning Apple’s groundbreaking iPhone unfairly locks out competitors, according to a person familiar with the matter, says the FT. The regulators’ interest comes in the wake of a dispute that broke out between Apple and software-maker Adobe, over the latest version of the iPhone software.
No one could accuse Neelie Kroes of slipping gently into retirement. In her last months as EU antitrust commissioner Ms Kroes has delivered a slap across the chops to several state-owned banks, and rolled up her sleeves regarding Oracle’s bid for Sun.
Now it is Italian energy conglomerate Eni’s turn to sweat. Read more
At the end of October, FT Alphaville came across some strange goings on in Oracle’s pending $7bn acquisition of Sun Microsystems.
Oracle had withdrawn its Russian antitrust filing, an unexplained move prompting speculation the deal was about to unravel. Read more
Here’s a curiosity – an apparent request from Oracle to the Russian antitrust authorities to withdraw the competition filing for its $7.4bn takeover of Sun.
News of this appears to have sparked a sudden widening of the spread between Sun shares and the Oracle offer terms, which opened at 14.7 per cent on Thursday and then quickly moved out to 17.8 per cent before coming back in a bit. That’s bid arbs taking evasive action, we guess. Read more
The mining and commodities rout continues and with that both BHP Billiton and Rio Tinto shares are under pressure.
Adding insult to injury is the denial late last night by Rio Tinto that it was indeed back in talks with hostile suitor BHP. No surprise then, Rio shares have taken a corresponding knock today, paring back much of their rumour-fuelled gains of yesterday. At their worst, shares dived no less than 16.3 per cent in Australian trade — their biggest intra-day slide since the October 1987 crash. Read more
Bloomberg reports that European Union regulators told lawyers for BHP Billiton the company’s $69bn hostile bid for Rio Tinto may break antitrust rules. The European Commission will likely issue a so-called statement of objections, which will outline the commission’s concerns that the combined companies’ share of the iron ore market may lead to price increases, Bloomberg said.