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1964 News for Corp. Counsel 1 (1964)

handle is hein.barjournals/nwsccptc1964 and id is 1 raw text is: No. 5, March, 1964 CONGLOMERATE MERGERS AND RECIPROCITY In our December, 1963, issue we reported on an address by George Miron, Chief of the General Litiga- tions Section of the Antitrust Division, concerning the Division's views on the subject of reciprocal buying and selling. Mr. Miron observed that mergers and acquisi- tions may enable the acquiring corporation to exer pressure on its suppliers to make reciprocal pur of goods produced by the acquired corporation. ur- ther, that in appraising the legality of acquisit ns under Section 7 of the Clayton Act, the Division ill thus consider not only what does happen, but w t might happen. The Federal Trade Commission has also embrace the theory that the mere opportunity to engage in re- ciprocal purchase agreements may invalidate a con- glomerate merger (basically the product expansion merger) under Section 7 of the Clayton Act. This theory has recently been applied concretely in several Federal Trade Commission and lower court decisions dealing with conglomerate acquisitions. A stimulating analysis and provocative critique of this theory and its disturbing implications was present- ed by E. Houston Harsha at the Midyear meeting of the Illinois State Bar Association. Mr. Harsha's paper en- titled The Conglomerate Merger and Reciprocity- Condemned by Conjecture? expresses the view that it is unreasonable and improper to predicate violation of Section 7 of the Clayton Act upon mere conjecture that the acquiring company may embrace an opportunity to engage in unlawful conduct under the antitrust laws. Mr. Harsha stated: ... it seems clear that the point of my differences with the en- forcement agencies, particularly the Commission, stems from my advocacy in some situations of a wait and see approach to conglomerate mergers. I think there are serious dangers in the growing tendency towards broad theoretical generalization, largely de hors any factual record, as to the supposed effects of conglomerate mergers. We are told that the proof-orientation of lawyers has led them into the sin of demanding factual in- quiry and protracted record evidence, a weakness which the merger-attackers put down to lack of 'sophistication.' In lieu of this 'show me' attitude, we are invited to imagine the inhibi- tions to competition which the conglomerate merger poses. That, they say, is how an 'incipiency' statute must be ad- ministered.... Where one line must be drawn, I submit, is where this form of conjecture turns upon the attribution of specific forms of con- duct which may be anticompetitive, unlawful, or even crim- inal, such as predatory price-cutting, tie-ins, boycotts, full-line forcing, and coercive reciprocity. First, it is simply unreason- able to assume that this 'attributive incipiency' is the 'prob- ability' upon which Sec. 7 enforcement turns. Second, there are specific statutory provisions for dealing with such abuses. Be- fore presuming such actions, I would wait and see if they do occur. A copy of this address may be obtained upon request to E. H. Harsha, Room 2900, Prudential Plaza, Chicago, Illinois 60601. PRACTICE BEFORE FEDERAL AGENCIES On November 13, 1963, the Florida Supreme Court modified its injunction in the Sperry case (140 So. 2d 587) to conform with the U. S. Supreme Court's hold- ing on certiorari (373 U. S. 379, 10 L.Ed. 2d 428) that & tered patent attorney may perform services rea- necessary and incident to the preparation and prosec tion of patent applications from an office in Fbiiida, even though not licensed to practice law in Florida, ut that the patent attorney may not otherwise en e i the practice of law in Florida. hile, the Wisconsin Supreme Court (114 . . 2d 796) had enjoined John J. Keller, a layman, from representing truckers before the Wisconsin Pub- lic Service Commission. On certiorari the U.S. Supreme Court (374 U.S. 102) vacated the judgment and re, manded in the light of Sperry. On remand the Wiscon- sin Supreme Court (123 N.W. 2d 905) held that Keller may practice before the Interstate Commerce Commis- sion but must not misrepresent the scope of his Inter- state Commerce Commission license and is still en- joined from performing any services in a representative capacity with respect to proceedings before the Wiscon- sin Public Service Commission. Keller's attorneys had argued that since Keller was permitted to advise and represent clients before the Interstate Commerce Com- mission he should also be permitted to practice before the Wisconsin Commission as an incident to his prac- tice before the Interstate Commerce Commission. Cer- tiorari is again being sought by Keller in the U.S. Su- preme Court and it has been reported that the Solicitor General has been asked by the court to file a brief. INVESTIGATIVE DEMAND In In re Petition of Union Oil Co. of California, 225 F. Supp. 486 (Cal. Dec. 18, 1963), the U.S. District Court, Southern District of California, Central Divi- sion, held that a civil investigative demand under the Clayton Act served on Union Oil Company of Cali- fornia by the Assistant Attorney General went too far in demanding information concerning The proposed acquisitions of fertilizer companies by petroleum com- panies. The Court observed that the statutory auth- ority for civil investigative demands under 15 U.S.C. 1311, 1312 is limited to inquiries for the purpose of ascertaining whether any person is or has been engaged in any antitrust violation (emphasis supplied). It further noted that a proposed acquisition was not, and quite obviously has not been, a violation of the pro- visions of 15 U.S.C. 18, cited in the demand before the Court and, therefore, the demand with respect to pro- spective acquisitions (for that reason also) was de- clared void and set aside. The decision was limited to the civil investigative demand and the Court com- mented that the question of issuing an investigative order was not before it. Digitized from Best Copy Available

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