Any Microsoft-Yahoo Deal To Face Scrutiny By US,EU Regulators
2/1/08 - Dow Jones News By Corey Boles
DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- Microsoft Corp. (MSFT) can expect to face a "rigorous and lengthy" antitrust review from regulators both in the U.S. and Europe if its proposed acquisition of Yahoo Inc. (YHOO) goes ahead, lawyers and academics said Friday.
The Redmond, Wash., company announced Friday it had made a friendly $44.6 billion approach for Yahoo.
Several antitrust lawyers and academics said they expected the deal would raise red flags in both Washington D.C. and Brussels among competition authorities.
"It's hard to imagine a deal that would more clearly raise red flags," said Carl Tobias, a professor at the University of Richmond's School of Law.
Tobias said that Microsoft would be fully expecting a thorough review of the transaction if Yahoo accepts its offer.
Friday, the Department of Justice's antitrust unit said it was "interested" in reviewing any proposed transaction involving Microsoft and Yahoo.
It would be the Department of Justice, rather than the Federal Trade Commission that would review the deal, officials said.
Frank Lamancusa, an antitrust lawyer at Bingham McCutchen, said he thought the deal would ultimately be cleared by U.S. competition authorities, but that the outcome of the European Union's review of the deal would likely be a lengthy affair.
He pointed to the fact that the U.S. Federal Trade Commission had approved Google Inc.'s (GOOG) proposed takeover of online advertising broker DoubleClick, but that deal was still being reviewed in the E.U.
Some said that the deal would face especially close analysis simply due to the fact that it involves Microsoft, long a favorite target of antitrust regulators on both sides of the Atlantic.
"I think it's going to get very intense scrutiny from the regulators just because Microsoft has been such a hot button issue for so many years," said Bill Wycoff, an antitrust lawyer with the firm Thorp Reed & Armstrong in Pittsburgh.
Just this week, a U.S. District Court judge in Washington D.C. announced she was extending the court's oversight of Microsoft for another 18 months until November 2009. That antitrust oversight stems from a 2002 agreement reached between the company and state and federal authorities, and had been due to expire in November 2007.
And in Europe, the Competition Directorate announced it was launching two new investigations of the software giant.
"I suspect a fairly intense and lengthy review period," said Sean Boland, an antitrust lawyer with the firm Howrey LLP in Washington D.C.
The specific business area that would face scrutiny, said lawyers and academics, is the search engine market.
According to recent research from analysts ComScore, Google ranked number one in December 2007 with 5.6 billion searches. Yahoo came in second with 2.2 billion and Microsoft a distant third with 940 million searches.
There would also be some overlap in the online advertising market following Microsoft's acquisition of online advertising firm aQuantive last year.
Sen. Herb Kohl, D-Wis., the chairman of the Senate Antitrust Subcommittee, issued a statement Friday, pledging to closely review the proposed transaction.
"We will need to scrutinize the deal carefully to insure that it will not cause any harm to the competitiveness of what has been a vibrant high tech marketplace, nor negatively impact the privacy rights of internet users," said Kohl.
He said the antitrust panel would hold a hearing into the merger if it went ahead. The subcommittee convened a hearing into the Google-DoubleClick deal last fall.
While Kohl didn't ultimately come out against that transaction, he did urge the Federal Trade Commission to proceed carefully in its review of the merger.
Another factor that must be considered, said Tobias, was the fact that 2008 is a presidential election year.
He said Microsoft would be hoping any review of the deal would be completed before the end of the year and the possibility of a Democrat winning control of the White House.
Otherwise, a new Democratic administration could launch its own review of the merger, which could delay any decision on the matter well into 2009, he said. |
