Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Antitrust goes political

with 2 comments

In the global world we live in, US parliamentary representatives now directly write to the EU administration requesting it to speed up the review of  business transactions involving US firms (!).

On 24 November, John Kerry and Orrin Hatch took the lead of a group of 59 Senators to request the EU Commission to quickly close its review of the Oracle/Sun Microsystems merger, approved earlier by the DoJ. Obviously, this is no more than political gesticulation. Yet, the context surrounding this letter exhibits again the GE-Honeywell-reminiscent “patronizing rethorics” which pollute transatlantic cooperation between competition agencies and, incidentally, affect adversely the interests of the firms under review.

In a nutshell, the Senators argue that since US agencies found no antitrust issue, it would be odd for the EU to raise competition concerns. The words used by Senator Hatch are crystal-clear:

This transaction has been thoroughly reviewed by the United States Department of Justice, which has decided to take no action.  Therefore, I hope the EC will quickly conclude their investigation into this transaction.”

Of course, there are many compelling reasons why an additional review of the EU is legitimate. The US review deals with the merger’s effects only on US territory, and not in the EU. In addition, one may argue that the intervention of a new agency is actually a good thing.  First, the US agencies may be wrong on the substance. Second, the US may also be biased when it comes to a transaction involving US firms active on global markets.

Overall, rather than writing to an external agency on which they have no legal influence whatsoever, US Senators should seek to use their legislative powers (if my recollections are correct, they have a say on external relations) to devise a credible US position re. the way forward in terms of global antitrust.

This is also  - although slightly different –  the position of Commissioner Kroes, who urged the Senators to focus on other, more important, issues… As reported by the AP:

Kroes slammed the senators for “interfering in someone else’s decisions rather than taking the most important decision that you have control over: improving health care.”

“Is this really more important than fixing your own health care system?” she asked in a speech, adding that the senators needed to get their priorities straight.

I paste below the official text of the letter.

As fellow government officials committed to the principle that competition is the cornerstone of healthy economic growth, we would like to take this opportunity to share our thoughts with you as to the proposed acquisition of Sun Microsystems, Inc. by Oracle Corporation.  In addition, due to Sun Microsystems’ deteriorating financial condition and the possible negative effect on employment of the company’s workforce, we respectfully request the European Commission expedite the completion of its investigation into this transaction.

The United States Department of Justice, after an intensive investigation, closed its inquiry into this transaction without taking any action.  In fact, the Justice Department did not find documentary evidence that this acquisition would harm competition.   We recognize that the European Commission has a sovereign right to thoroughly investigate transactions where corporations utilize the European Union’s marketplace.  Further, it is our understanding the Commission is concerned about competition in the database software market.  However, we have been informed by Sun Microsystems that their subsidiary, which competes in this specific market, generates only €17 million in revenue and that the same market has competitors with capitalizations of tens of billions of Euros.
Unfortunately, Sun Microsystems’ financial position has become more precarious and the Commission’s inquiry has continued.  Some have raised concerns over the company’s ability to continue to employ its thousands of workers.  Accordingly, we respectfully request the European Commission complete its investigation of this transaction as quickly as possible.
Thank you for your attention to this matter“.

(Image possibly subject to copyrights: Source here)

About these ads

Written by Nicolas Petit

10 December 2009 at 11:59 am

Posted in Uncategorized

2 Responses

Subscribe to comments with RSS.

  1. FYI, I heard through the grapevine that a DoJ official actually attended today’s oral hearing in Oracle/Sun.

    Nicolas Petit

    11 December 2009 at 12:59 am

    • “Pursuant to the terms of the Administrative Arrangements on Attendance of 1999, the US and EU, as appropriate, may attend certain key events in the other’s investigative process. These include (a) the EU’s Oral Hearing and (b) the merging parties’ presentations to the Assistant Attorney General or Deputy Assistant Attorney General or to the Director or Deputy Director of the Bureau of Competition at which the parties present their arguments prior to the agency’s decision whether to take enforcement action.”
      Judging by the EU’s coming unconditional approval, one can only come to the following conclusions: i) DG Competition screwed up big time, ii) the review process is a joke, iii) the EU merger review is a side show. One could also draw similar conclusions from the reasoning used for closing the Qualcomm case. apparently, if there are no complainers thene there is no antitrust case. so a file remains open as long as there are complainers irrespect of the merits of the case. As a European myself I fell ashamed at non-tax paying bureaucrats joking around with tax payers’ money.

      hun

      15 December 2009 at 4:58 pm


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 840 other followers

%d bloggers like this: