Legal News

A Done Deal? Under New Antitrust Chief, Maybe Not

By Ashby Jones

Outside of a few recent blockbuster pharma mergers, the deal landscape has been largely moribund in recent months. It’s been bad news for bankers and lawyers, of course, but also bad news for the new fleet of antitrust regulators in D.C., who are finding they have little to do with those recently sharpened pencils.

So what to do? As the NYT puts it in an article Monday, “revisit the past.” Christine Varney, President Obama's pick to run the antitrust unit at the Justice Department, said in her nomination hearings last week that she was open to retrospectively studying the effects of approved mergers. Click here and here for other blog posts on Varney.

Something we didn’t know: There are no statutes of limitations on deals. And according to the Times, the 2007 merger between CVS and Caremark could be one of the first cases to be re-examined.

Some history explains why: In the early 1990s, Merck agreed to buy pharmacy benefits manager Medco. The first Bush administration approved it, but the Clinton administration reopened the case. Federal authorities, with Varney taking a leading role at the Federal Trade Commission, claimed vertical integration of drug middlemen like Medco invited anticompetitive behavior.

Fast forward to 2007. The drugstore chain CVS agreed to acquire Medco's rival Caremark, and the merger won quick approval. Now, a new Democratic administration is in power with Varney in the top position. And groups aligned to the administration's thinking have claimed CVS Caremark's vertical integration is anticompetitive.

As the Times writes:

Of course, nothing may happen. CVS Caremark says claims of anti-competitive actions have no merit and there are strong internal safeguards against improper data-sharing. And Ms. Varney's appointment hasn't even been approved. Yet CVS Caremark's board - like those at acquisitive companies ranging from AT&T to Whirlpool - shouldn't assume their mergers of the past won't become headaches of the future.

Full post as published by Law Blog - WSJ.com on March 16, 2009 (boomark / email).