Antitrust and the Justice Department

[rbaker]

While it is way too soon to tell, there is a new Sheriff in town who has said that he will "drain the swamp." Of greater import is the fact that the "townsfolk" seem to be rallying behind him. While not yet sworn in, he seems to have a good posse in place and we may see some very different core values implemented in the near future.

Let's just calm down and let future events unfold.

[Steve Machol]

It will be interesting but let's not turn this into a political discussion. No good will come of that.

[drk]

My concern is this is a European merger. What could the U.S. government do?

[Quince]

My concern is this is a European merger. What could the U.S. government do?

My understanding is that they can't do anything because neither are American companies. I would think if there were a power to intervene it would come from Europe.

[rbaker]

Yes, they are indeed foreign corporation but they do business in the US. As such they do fall under some Federal regulation and may be subject to some restrictions if found to be in conflict with fair trade or price fixing.

We have seen such actions in the past, Chinese steel comes to mind.

[drk]

I agree Dick. If there is any violation of whatever is deemed "fair trade" then maybe something would happen.

I suppose that the FTC has to approve acquisitions, though. Maybe it's time for Essilux to stop buying companies. (But companies like to sell out and make the bucks, like US Optical.)

[JJopt]

There have been two informal FTC investigations over the past 10 years, both with the conclusion "Nothing to see here", despite suspicions of violations. Essilor has good lawyers.

[shanbaum]

I wrote this on ODs on Facebook in response to similar posts:

Federal and state law applies to companies under their respective jurisdictions, and domicile is not necessary for jurisdiction. U.S. regulators and courts may not be able to prevent the merger, but they can certainly order the companies to take actions to mitigate the anti-competitive effects (for example, since U.S. law empowers them to do that) thereof . The same is true of all countries where the two companies do business, if the laws in those countries empower them to regulate such things.

I doubt that there will be much pushback on this merger from regulators; as I've been fond of saying, if Exxon and Mobil can merge, any two companies can merge.

The transaction will also be subject to the scrutiny of EC regulators, who, from my perspective, have lately been the most aggressive defenders of competition in markets - but, there, too, I'd be surprised to see the merger prevented or diminished in any significant way.

[mervinek]

Yes, they are indeed foreign corporation but they do business in the US. As such they do fall under some Federal regulation and may be subject to some restrictions if found to be in conflict with fair trade or price fixing.

That would be interesting. I thought nothing could be done due to it being a foreign corporation.

[Tallboy]

My concern is this is a European merger. What could the U.S. government do?

Its hard to say. Luxottica has that game down pat man. Luxottica SpA makes the frames, sells them to the American company Luxottica Trade and Finance, which in turn sells them to retails owned by Luxottica Retail North America, where they are paid for by reimbursements from Eyemed.

Friggin Optical Mafia.

[shanbaum]

All the layers of corporations, foreign and domestic, really don't matter; the merger will be scrutinized by the DOJ and FTC, and a raft of regulators around the globe. Just don't expect them to do too much about it - especially not the U.S., although it's impossible to predict what attitude the new administration will have towards consolidation under foreign ownership.

(I have to say, the possibility that a Republican-dominated government might turn out to be antagonistic towards consolidation seems a bit Zen-like).

[rbaker]

In the case of Essilor/Luxottica the corpse has barely reached room temperature. As shanbaum pointed out "the merger will be scrutinized by the DOJ and FTC, and a raft of regulators around the globe."

Dogs bark, ducks quack and regulators regulate. Hopefully, in their wisdom (and I use the term loosely) they will exercise the wisdom of Solomon and "do the right thing" whatever that may be.

In truth, from a business perspective, it is much ado about nothing.

[Chris Ryser]

My concern is this is a European merger. What could the U.S. government do?

They have merged in Europe under European Law.

However the newly acquired divisions are, and will be all added and paid for, by some of each country's already incorporated and acquired companies, working under their own name and incorporations. So they will appear to be totally local.

It is all in place and already active and working, as far as my information sources say.

[shanbaum]

No, the merger has not yet transpired; it's subject to stockholder and regulatory approval, neither of which has occurred.