Law Professors Weigh In on ASSA ABLOY Acquisition

January 19th, 2023 by Travis Rains

A collection of law professors from around the United States have weighed in on ASSA ABLOY’s $4.3 billion acquisition of the Hardware and Home Improvement (HHI) division of Spectrum Brands. In their amicus brief, filed in U.S. District Court for the District of Columbia, the professors argue that ASSA ABLOY must show that its proposed remedy, the sale of Emtek and the Smart Residential businesses, eliminates the risk posed to competition.

ASSA ABLOY’s agreement to acquire the HHI division of Spectrum Brands includes a purchase price of $4.3 billion on a cash and debt-free basis. On September 15, 2022, the U.S. Department of Justice (DOJ) blocked the proposed acquisition of HHI over competition concerns. ASSA ABLOY then announced that it would sell Emtek and the Smart Residential businesses as a means for addressing the DOJ’s concerns.

Professors argued in court documents that they share a “professional interest” in seeing development of anti-trust law that protects consumers and competition. Court documents identify the professors as Herbert Hovenkamp, Erik Hovenkamp, A. Douglas Melamed, Steven C. Salop and Jennifer E. Sturiale.

Defendants argued in court documents that the professors’ position mirrored that of the U.S. government, in that defendants should have a “special burden” in merger cases with divestitures of overlapping assets. Since defendants are limited to one 12-page brief, they said allowing another brief echoing the government’s already-stated position would be “inappropriate” and that there’s no need for “piling on.”

“Movants do not bring a unique perspective to this case,” the defendants wrote in court documents. “They wish to argue that the court should endorse a special rule that gives defendants ‘the burden of proving that the divestiture they propose will sufficiently solve the competition problems created by the [un-remedied] merger.’”

That argument echoes the same point of view taken by the U.S. government, defendants suggest. Furthermore, at the time, defendants called the professors’ proposed brief “meritless.” On the other hand, with their experience in anti-trust law, professors argued they were “uniquely positioned to provide the court with a deeper and thoroughly reasoned perspective …”

After receiving a go-ahead from the judge allowing them to weigh in, the professors filed their brief on January 13. The main question at issue within the brief pertains to which party bears the evidentiary burden of demonstrating the adequacy of the remedy.
“The question presented in this case, and others, is how the court should allocate the burden of persuasion when the merging parties claim—in this case in the eleventh hour—to have a restructure proposal that eliminates that risk,” amici argue. “Under these circumstances, the proposed remedy is the merging parties’ defense, which they crafted and are uniquely positioned to explain. It should be their responsibility to demonstrate that the remedy is concrete, comprehensible, enforceable and eliminates the risk to competition,” they suggest.

The case also saw a status update on January 13. According to court documents, the parties in the case will continue discussing a stipulation regarding product market definitions. A status conference was scheduled for Wednesday, January 18, for which documentation is not yet available.

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