According to the complaint, Medtronic, through its minority ownership interest in SurVivaLink Corporation, and Physio-Control were direct competitors. The complaint alleged that SurVivaLink and Physio-Control were two of only three significant suppliers of the relevant product. Pursuant to an investment agreement, Medtronic, which held less than 10 percent of SurVivaLink's voting securities, was given the explicit right to name a member to the company's board of directors and to receive certain non-public, competitively sensitive information. Under the order, Medtronic was prohibited from exercising any right to name a member to SurVivaLink's Board of Directors, participating in any business decisions of the company or proposing any corporate action. The order also limited Medtronic's ability to vote on any matter that requires the approval of SurVivaLink's shareholders by requiring Medtronic to delegate its voting rights to be voted in a manner proportional to the votes of all other shareholders. In addition, the order prohibited Medtronic from receiving non-public, competitively sensitive information relating to SurVivaLink, and required it to return any documents that contained any trade secrets, commercial information or financial information. Further, the order prevented Medtronic from increasing its ownership interest in SurVivaLink without Commission approval.
ONGOING REASSESSMENT OF THE EFFECTS OF THE PREMERGER NOTIFICATION PROGRAM
Although a complete assessment of the impact of the premerger notification program on the business community and on antitrust enforcement is not possible in this limited report, a few observations can be made.
As indicated in past annual reports, the HSR program ensures that virtually all significant mergers or acquisitions occurring in the United States will be reviewed by the antitrust agencies prior to consummation. The agencies generally have the opportunity to challenge unlawful transactions before they occur, thus avoiding the problem of constructing effective post-acquisition relief. Thus, HSR is doing what Congress intended -- giving the government the opportunity to investigate and challenge mergers that are likely to harm consumers before injury can occur. Prior to the premerger notification program, businesses could, and frequently did, consummate transactions that raised significant antitrust concerns, before the antitrust agencies had the opportunity to consider adequately their competitive effects. The enforcement agencies were forced to pursue lengthy post-acquisition litigation, during the course of which harm from the consummated transaction continued in place (and afterwards as well, where achievement of effective post-acquisition relief was not practicable). Because the premerger notification program requires reporting before consummation, this problem has been significantly reduced.
Although highly effective, the HSR program has periodically prompted criticism from the business and legal communities that the program is overreaching, that the reporting thresholds may be too low, or that the process may cause delay. Cognizant of these concerns, the enforcement agencies continue to seek ways to speed up the review process and reduce burdens for companies. Following on the adoption of five new exemptions in 1996 that eliminated approximately 10 percent of filings, the agencies are examining additional means to exempt from the filing requirements transactions that are not likely to be problematic. The agencies will continue ongoing review of the HSR program in order to make it as minimally burdensome as possible without compromising the prompt and effective relief intended to result from the HSR program.
