The Antitrust Division found itself in the middle of a dust-up this week, when one report surfaced Tuesday evening that it was close to approving a pending merger between ticket giant Ticketmaster and concert promoter Live Nation.
But the next day, reports surfaced that shot down the story, and also went so far as to suggest settlement talks might have actually broken down and a government team was prepping for court.
While neither company nor the Justice Department will comment on the developments, and no one has confessed to the leak, the different reports got the antitrust world talking.
“It’s fascinating,” said one long-time antitrust attorney who is not working on the merger, referring to the brazenness of leaking a bad story that also moves the market. “It was a fairly strong-willed leak.”
But while the two reports seem at odds, observers caution, both could have some truth to them. One team of DOJ lawyers could be prepping for court, while another continues to work toward a potential settlement.
If the Antitrust Division has serious concerns about a deal, it usually follows one of two paths, said David Meyer, a former Antitrust Division deputy who co-heads the antitrust practice at Morrison & Foerster.
The division would either insist on a “binding timing commitment” from the parties that would give the agency time to prepare for court if negotiations broke down, Meyer said. Or it would be preparing for court while settlement discussions were going on.
“I’m aware of situations when I was there where thinking about the trial team occurred very early” in the review process, Meyer says.
When the DOJ reviewed Google’s proposed deal with Yahoo at the end of the prior administration, it brought in Hogan & Hartson’s Sandy Litvak to potentially litigate the case a few months before the parties abandoned the deal.
When the current Antitrust Division team took over, well-known litigator William Cavanaugh joined it as a deputy, signaling that the new Obama administration might be ready and willing to oppose more mergers in court.
Assistant Attorney General Christine Varney took over the Antitrust Division in April with a vow to reinvigorate enforcement. The Ticketmaster deal is being closely watched as one of the first big tests of the new administration.
The deal’s opponents say there is some precedent for Varney to take the merger to court rather than settle for what critics argue might be a weak divestiture.
The Center for American Progress’ David Balto, who has been working with a coalition opposed to the merger, points out that when Varney was a commissioner at the Federal Trade Commission during the Clinton administration, she voted to take an office supply store deal to court rather than accept a settlement the parties had negotiated.
The commission voted to litigate the proposed merger between Staples and Office Depot in 1997. It rejected a proposed settlement that would have required Staples to spin off stores in markets where the post-merger company would lack a serious competitor.
Varney “learned early in the Clinton administration” that “accepting a weak divestiture would be a mistake,” Balto said in an email to Main Justice. The court sided with the FTC, and blocked the merger.
The FTC’s decision in the Staples merger “was the right one,” Balto says, and it “revitalized” the FTC’s “role as a merger enforcer.”
