Corporate & Securities Law

DOJ Files Another Section 2 Case

Press release here. Here’s an excerpt:

The complaint alleges that post-acquisition Microsemi raised prices significantly on small signal transistors certified by the Defense Supply Center Columbus (DSCC), a component of the DOD, at the Joint Army-Navy Technical Exchange-Visual Inspection (JANTXV) and Joint Army-Navy Space (JANS) levels of reliability on its qualified manufacturers list or QML. Industry participants rely upon DSCC?s QML certifications and qualifications for electronic components used in space, military and commercial applications. The Department said that without competition from Semicoa, Microsemi has the power to selectively raise prices to customers that Microsemi is aware cannot substitute lower grade components for JANTXV and JANS small signal transistors. In addition, Microsemi has threatened to impose on these customers less favorable terms of service than were provided before the acquisition, the Department said in its complaint.

The Department also said that Semicoa?s entry into the manufacture and sale of JANTXV and JANS diodes likely would have benefitted customers with lower prices, shorter delivery times and more favorable terms of service. Prior to the acquisition, Semicoa was developing these diodes and was poised to compete aggressively with Microsemi.

The July 2008 transaction was not required to be reported under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which requires companies to notify and provide information to the Department and the Federal Trade Commission before consummating certain acquisitions. As a result, the Department did not learn about the transaction until after it had been consummated.

The Department alleges that Microsemi violated Section 7 of the Clayton Act, which deals with mergers, and Section 2 of the Sherman Act, which deals with monopolization.

Maybe the boom is coming early; or monopolization enforcement is not quite reinvigorated yet.

Full post as published by Truth on the Market on December 23, 2008 (boomark / email).