Judicial decisions as well as pronouncements from the FTC and the Justice Department offer guidance on using an efficiencies defense in merger cases

Article Abstract:

The Department of Justice and the FTC jointly revised the efficiencies section of the 1992 Horizontal Merger Guidelines in Apr 1997, thereby stressing that they would only validate efficiencies which do not result from anti-competitive reductions in output or service, which are merger-specific and which are verified. Short-term efficiencies are more likely to pass muster than any delayed cost saving claimed. Federal cases which have tested the efficiencies defense since 1995 are FTC v. Butterworth Health Corp., FTC v. Staples, and Long Island Jewish Medical Center.

Unfair competition (Commerce), Unfair competition

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Under the 'merger of equals' doctrine, can a target board always favor a friendly suitor when a second bidder makes a higher, unsolicited offer?

Article Abstract:

Businesses interested in a corporate sale or breakup can avoid the duty as stated in the Delaware Supreme Court case of Revlong v. MacAndrews & Forbes Holdings, Inc. to seek the highest merger price obtainable is the transaction is deemed a merger of equals rather than a sale. The use of stock, the sharing of control and the absence of a controlling shareholder or control block characterize such a merger.

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