In United States v. Chancellor Media Corporation and SFX Broadcasting, Inc., the Division challenged Chancellor's acquisition of SFX Broadcasting, Inc.'s four Long Island, New York, radio stations, alleging that the acquisition would result in local businesses paying higher radio advertising prices. Chancellor and SFX were the two largest radio groups on Long Island, and the merger would have created a dominant Long Island radio group with more than 65 percent of the market. The suit, which was the first contested court challenge to a radio station merger since passage of the Telecommunications Act of 1996, was resolved when Chancellor agreed to a final judgment requiring it to abandon its plan to acquire SFX's Long Island stations. The judgment also required Chancellor and SFX to terminate a local marketing agreement under which Chancellor had been operating SFX's Long Island radio stations in anticipation of the acquisition. The judgment was entered by the court on June 15, 1998.
In United States v. Aluminum Company of America and Reynolds Metals Company, the Division challenged Alcoa's acquisition of Reynolds' aluminum rolling mill and other related assets in Muscle Shoals, Alabama. As part of the acquisition, Alcoa planned on closing the Reynolds facility. The complaint alleged that the acquisition would have resulted in higher prices for aluminum used to produce cans and higher prices to consumers who purchase canned beverages. Alcoa and Reynolds were respectively the largest and third largest makers of aluminum can stock in the United States. The two firms together had more than 60 percent of U.S. aluminum can stock capacity, in a business which had only two other major players and U.S. sales exceeding $4.5 billion in 1996. On December 30, 1997, Alcoa abandoned the transaction.
In United States v. ENOVA Corporation, the Division challenged the proposed $6 billion merger of Pacific Enterprises, a California natural gas utility, and Enova Corporation, a California electric utility company. This was the Department's first challenge to a merger between a gas and electric utility. The complaint alleged that as a result of the merger of Pacific's natural gas pipeline with Enova's electric power business, the combined company would have both the incentive and the ability to lessen competition in the market for electricity in California and that the merger likely would have resulted in consumers in California paying higher prices for electricity. The complaint further stated that in early 1998, the California electric market experienced significant changes as a result of legislatively mandated restructuring. In this new competitive electric market, gas-fired plants, which are the most costly generating plants to operate, set the price that all sellers receive for electricity in California in peak demand periods. Thus, if a firm could increase the cost of gas-fired plants by raising fuel prices, it could raise the price all sellers of electricity receive, and increase the profits of owners of lower cost sources of electricity. In this way, the acquisition of Enova's low cost electric generating plants gave Pacific a means to benefit from any increase in electric prices. A proposed consent decree was filed simultaneously settling the suit. The decree requires Enova to sell off its two largest low-cost electric power plants in order to complete its merger with Pacific. The decree is awaiting entry by the court.
In United States v. Lockheed Martin Corporation and Northrop Grumman Corporation, the Division challenged the proposed acquisition of Northrop Grumman by Lockheed Martin, an $11.6 billion merger that was the single largest ever challenged by federal officials. The complaint alleged that the merger would have resulted in unprecedented vertical and horizontal concentration in the defense industry, which would substantially lessen, and in several cases eliminate, competition in major product markets critical to the national defense.
