U.S. Antitrust Enforcers Add Litigators to Bolster Odds at Trial
U.S. antitrust enforcers are hiring litigators from major law firms, signaling a growing readiness for court battles to block mergers they view as anticompetitive.
The Justice Department’s antitrust division on Jan. 3 brought in Mark Ryan, a partner at Mayer Brown LLP (1120L), as director of litigation, a new position. He’ll work for Joseph Wayland, a former Simpson Thacher & Bartlett LLP antitrust litigator who joined as civil enforcement chief a year ago. The Federal Trade Commission intends to hire a trial attorney in coming months, Commissioner Tom Rosch said in an interview.
“If a case is worth bringing, then we should be prepared to litigate it,” Rosch said.
As an improving economy spurred a 24 percent jump in merger proposals last year from 2010, the Obama administration may be seeking to respond more forcefully to deals it considers anticompetitive, said Andrew Gavil, an antitrust professor at Howard University School of Law in Washington. Being prepared for trials sets up a credible threat that may also help regulators win more favorable settlements, he said.
“It’s a way of deterring more aggressive deal making,” Gavil said.
In its first trial in seven years, the antitrust division in November defeated H&R Block Inc.’s proposed acquisition of the maker of TaxAct tax preparation software. The last trial before that was in 2004 when the division failed to stop Oracle Corp.’s $8.4 billion purchase of PeopleSoft Inc., according to department data.
Teams of Attorneys
Government lawyers often face teams of attorneys, many of whom had years of antitrust experience at the Justice Department or FTC. AT&T Inc. (T) hired at least three firms to help defend its proposed $39 billion bid for T-Mobile USA Inc., the biggest proposed deal of 2011.
Its team was led by Rich Rosen and Donna Patterson, both former senior officials in the antitrust division, at Arnold & Porter LLP, which has represented AT&T and its predecessor, SBC Communications Capital Corp. in acquisitions.
They worked alongside Crowell & Moring LLP partners Randy Smith, an FTC veteran, and Kathryn Kirmayer. When the Justice Department sued to block the transaction, trial lawyers Mark Hansen and Michael Kellogg of Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC, joined the team, each bringing more than 25 years of litigation experience.
They coordinated with T-Mobile lawyers including Cleary Gottlieb Steen & Hamilton LLP attorneys George Cary, who more than a decade ago was deputy director of the FTC’s competition bureau, and Mark Nelson, who has almost 20 years of experience in antitrust litigation.
Wayland led the courtroom maneuvering against AT&T with the help of Los Angeles-based lawyer Glenn Pomerantz, retained temporarily from Munger, Tolles & Olson LLP to bolster the trial team, and the division’s in-house lawyers and paralegals. The case ended in December when AT&T dropped the proposal.
“The Justice Department is more aggressive these days and has redeveloped some self-confidence in their ability to go to court,” said Bert Foer, president of the American Antitrust Institute, a Washington-based nonprofit research group that favors stronger enforcement. “They are rebuilding their armaments.”
Merger filings under antitrust regulations rose to 1,450 in fiscal 2011 from 1,166 filings the year before, Sharis Pozen, the acting head of the Justice Department’s antitrust division, said in a speech to the American Bar Association in November.
Approved or Settled
While most of the deals were approved or settled with conditions, a few faced court challenges, Pozen said.
“We have made a concerted effort to increase the division’s litigation resources,” Pozen said. “Bringing additional experienced trial attorneys to the antitrust division is a perfect complement to our team of experienced litigators and trial attorneys.”
William Baer, who leads the antitrust team for Arnold & Porter LLP in Washington, is being vetted by the White House to become the new antitrust chief when Pozen departs April 30, according to two people familiar with the process who asked not to be identified because of its confidential nature.
“It’s extremely interesting and prestigious work,” Melissa Maxman, the Washington-based co-chair of the antitrust practice at Cozen O’Connor LLP and a former assistant U.S. attorney, said of big-firm lawyers who go into the government. “You have a steady stream of interesting cases, there’s a lot of autonomy, you don’t have to seek out clients and you get to wear the white hat. The only downside is you don’t make as much money.”
Winning antitrust cases has become more difficult over the past decade as a line of U.S. Supreme Court decisions on private litigation narrowed antitrust liability. That has increased the agencies’ need to fortify their litigation staff, Gavil said. The Justice Department and FTC have joint authority to decide if mergers violate antitrust laws.
The FTC, which on Jan. 27 filed a complaint to stop Omnicare Inc.’s hostile $440.8 million takeover of PharMerica Corp., lost two cases last year, including an appeal to block Danish drugmaker Lundbeck Inc. from acquiring two medications for the treatment of potentially fatal heart conditions affecting newborns. The FTC said Jan. 20 it doesn’t intend to seek review of the case by the Supreme Court or proceed further, a decision Commissioner Rosch opposed.
“The FTC has taken a hit and they’ve got to start turning this around,” said Herbert Hovenkamp, a professor and antitrust specialist at the University of Iowa College of Law in Iowa City. “They should have won those cases.”
The FTC hired Edward Hassi in February 2011 as chief trial counsel for the competition bureau, replacing J. Robert Robertson, who joined Hogan Lovells. Hassi joined from O’Melveny & Myers LLP, where he led large litigation teams.
While both agencies have experienced lawyers, they mostly do investigations and have few opportunities to hone trial skills.
Rosch, who has more than 40 years of experience as a trial lawyer for business clients including Chrysler Corp., General Motors Corp. and Greyhound Lines Inc., said the FTC should bring more lawsuits to block deals. The agency reports publicly settling nine challenges to mergers last year while five were resolved before any action was taken. Three cases went to court.
“We still don’t litigate everything I’d like to litigate,” Rosch said.