The Wall Street Journal-20080204-Microsoft-s Bid for Yahoo- Deal Faces Tough Scrutiny From Antitrust Regulators
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Microsoft's Bid for Yahoo: Deal Faces Tough Scrutiny From Antitrust Regulators
Full Text (361 words)Microsoft Corp.'s $44.6 billion bid for Yahoo Inc. is expected to get a hard look from European and U.S. antitrust enforcers and lawmakers, possibly delaying a completed deal for six months or more. But merger-law experts predicted that a buyout ultimately would win approval.
The Justice Department confirmed that it would undertake an antitrust investigation, and members of Congress also said they would study the matter. In Brussels, a European Commission spokesman declined to comment.
The potential effects on online search and advertising would get the most scrutiny, antitrust lawyers said, because the deal combines the second and third-largest players in the industry. But they also said regulators are generally reluctant to interfere in emerging and fast- changing markets, making an outright challenge less likely.
Matthew Cantor, a lawyer with Constantine Cannon LLP, New York, said the electoral calendar could have been a factor. With a year left of relatively lax Bush-administration enforcement, and the recent approval of Google's buyout of online advertising firm DoubleClick, "the window for Microsoft to make an aggressive move against a dominant Google was now," he said.
In Europe, officials are wary of the software giant's desktop dominance and prospects that it could use its Windows monopoly to wrest control of new markets. That will likely drive a tough antitrust review there, perhaps more intense and protracted than in the U.S. But antitrust lawyers predict the combination will eventually be approved in Europe as well.
Both in Europe and the U.S., Microsoft is expected to argue the deal actually increases competition, by giving Google a more formidable foe. Catriona Hatton, a lawyer at Hogan & Hartson in Brussels, said the combined company would be a "counterweight to Google."
European regulators could choose to examine so-called conglomerate effects -- the notion that Microsoft could use its monopoly in desktop operating systems to gain dominance in one of Yahoo's markets. But under EU law the threshold for blocking acquisitions on such grounds is high.
Even if it wins approval, Microsoft remains under intense scrutiny in Europe. It lost a longrunning landmark battle last fall when an EU court upheld a 2004 decision condemning the company for abusive behavior.
