Thursday, August 07, 2003

Antitrust News: Another End-run

The FTC doesn't like the fact Congress raised the threshold for reporting mergers a few years ago. This means that unless a proposed merger is worth a certain dollar-value, the FTC is not entitled to receive a Hart-Scott-Rodino (HSR) filing in advance of the merger's consummation. As a result, the FTC under Tim Muris has moved to undo a number of HSR-exempt mergers after the fact. Today the Commission filed a complaint to do just that in the case of a software company:
Alleging that Aspen Technology, Inc’s (AspenTech) $106.1 million acquisition of Hyprotech, Ltd. (Hyprotech) in 2002 was anticompetitive and led to the elimination of a significant competitor in the provision of process engineering simulation software for industry, the Federal Trade Commission today authorized its staff to file an administrative complaint challenging the transaction, which was exempt from the reporting obligations of the Hart-Scott-Rodino (HSR) Premerger Notification Act.

“AspenTech’s purchase of Hyprotech directly led to the combination of two of the three largest firms in the development and sale of certain process engineering simulation software,” said Susan Creighton, Director of the FTC’s Bureau of Competition. “Although the fact that a merger has been consummated increases the complexity of the Commission’s decision to seek relief, that hurdle is not sufficient for the agency to forgo a challenge to a transaction that is likely to lead to anticompetitive effects.”
It's no accident that Susan Creighton, who took over the Bureau of Competition on Monday, is behind this prosecution. Before joining the FTC in 2001, Creighton was a top lawyer for Netscape in their antitrust puruit of Microsoft. She was a principal author of the antitrust theory used to unjustly convict Microsoft of "illegal monoplization" in the web browser market. Also not surprisingly, her appointment as Bureau director was welcomed by antitrust advocates in the technology industry:
Tech lobbyists welcomed Creighton's appointment, saying her depth of knowledge about the industry is a good sign for enforcement of fair competition in the industry.

"She's a very smart, very savvy player,'' said Computer and Communications Industry Association President Ed Black.

She is one of the few people who was able to combine her understanding of technology, antitrust law, and the economics of the industry to articulate the competitive problems associated with Microsoft, Black said.
CCIA, the group Black heads, is one of the two industry groups pursuing an appeal of the federal antitrust settlement with Microsoft. No doubt CCIA will enjoy special access to Creighton as she assumes her new role of deciding how the tech industry should be governed.

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