Whirlpool-Maytag Moves to Agencies
Now that the battle between Maytag Corp. suitors is settled, the nation's two antitrust regulators are waging a fight over which will review Whirlpool Corp.'s bid to buy the struggling appliance maker. The outcome of the tug of war between the Federal Trade Commission and the Department of Justice could have long-standing ramifications for the agencies. Not only will the winner get to review the high-profile, $2.7 billion deal, but it can claim jurisdiction over home-appliance mergers for years to come.
By Cecile Kohrs Lindell | August 25, 2005 at 12:00 AM
Now that the battle between Maytag Corp. suitors is settled, thenation's two antitrust regulators are waging a fight over which will reviewWhirlpool Corp.'s bid to buy the struggling appliance maker. The Federal Trade Commission and the Department of Justice dividedeals between themselves, but it often takes arm wrestling and horse-trading tosettle the score. The outcome of the tug of war could have long-standingramifications for the agencies. Not only will the winner get to review thehigh-profile, $2.7 billion deal, but it can claim jurisdiction overhome-appliance mergers for years to come. Sources following the Maytag deal speculate that the FTC is morelikely to land the review, but that's no certainty. The FTC reviewed the lastbig appliance deal roughly two decades ago and handles most consumer productmergers such as the ongoing review of Procter & Gamble Co.'s acquisition ofGillette Co. "Neither agency has a clear claim to this case," saysJoe Simons, an antitrust partner at Paul, Weiss, Rifkind, Wharton &Garrison. An agency typically has "clear claim" when it hasreviewed a deal involving one of the merging parties or has examined anacquisition in the same industry within the past five years. Because therehaven't been any major appliance mergers recently, Whirlpool-Maytag is up forgrabs. This means lawyers from the FTC and the DOJ will meet to hash outthe matter. In some cases, agency lawyers are so willing to land a plum,high-profile case that they will sacrifice other deals or matters underinvestigation as a sort of trade. Members of the antitrust bar have criticized the bazaar-likeatmosphere for years. The lawyers complain that the back-and-forth wastesvaluable time and their clients resent the increased legal fees. Recently, whenBAE Systems plc purchased United Defense Industries Inc., the two federalagencies battled for 22 days before the $4.2 billion deal went to the lawyersat Justice. According to federal law, that left only eight days for Justice toOK the deal or order the companies to go through the expense of submitting asecond round of information. Instead, company lawyers withdrew and refiledtheir paperwork, giving them another 30-day look under the Hart-Scott-RodinoAct. The merger ultimately cleared without a second request for informationfrom Justice. Regulators acknowledge the problem. Four years ago, then-FTCChairman Timothy J. Muris and his counterpart at the DOJ, then-AssistantAttorney General for Antitrust Charles James, negotiated a deal that would haveclarified which types of mergers would go to which agency. The agreement wasscuttled when key members of Congress complained. For Maytag and Whirlpool, the inter-agency debate is probablyjust the start of the spin cycle. After one agency actually lands the deal, themerger between the No. 1 and No. 3 U.S. appliance manufacturers is widelyexpected to generate an extensive antitrust review. Copyright �2005 TDD, LLC. All rights reserved.