Apple/Beats Deal Visits Washington First
Posted at 6:23 p.m. on May 29, 2014
(Andrew Burton/Getty Images)
When Apple announced that it was purchasing Beats Music, it mentioned that the transaction likely would close in the fourth quarter of the fiscal year, “subject to regulatory approvals.” But whose umbrella does that regulatory approval fall under?
The size of the deal guarantees that either the Federal Trade Commission or the Justice Department’s Antitrust Division will have to take a look.
Technocrat talked to Joseph Bauer, a law professor at Notre Dame who’s an expert on antitrust issues. Here’s how it works: A statute called the Hart-Scott-Rodino Act requires mergers or acquisitions that exceed a certain dollar amount to file paperwork with both the FTC and the DOJ’s Antitrust Division. The $3 billion price, in this case, hits the threshold, Bauer says.
Once the DOJ and the FTC agree on who’s going review the transaction, the other agency backs off, he says. Both agencies wouldn’t be reviewing it.
There can be some territorial fighting between the agencies about who’s going to conduct a review, but “that doesn’t happen very often,” he says.
The agencies’ goal, of course, is to make sure that mergers and acquisitions don’t substantially diminish competition in the marketplace. In this case, although Apple and Beats together would represent a large chunk of the online music business, there is plenty of competition, including companies such as Spotify and Pandora. (Apple officially bought Beats Electronics LLC, which includes the Beats Music streaming service as well as the company’s headphone manufacturing and software-development divisions.)
The Federal Communications Commission, meanwhile, says it won’t be reviewing the Apple/Beats deal because spectrum licenses aren’t involved.