The complaint alleged that the merger would result inincreased prices and decreased quality for logging-while-drilling ("LWD") tools and services for oil and natural gas drilling projects, as well as decreased competition in the development andimprovement of LWD tools. LWD services provide information to oil and gas companies about the formations through which the companies are drilling, whether there is oil in the formation, and the ease with which oil can be extracted. Total worldwide revenues for LWD services in 1997 exceeded $500 million. A proposed consent decree was filed simultaneously settling the suit. The decree requires Halliburton to divest its entire LWD business, including its manufacturing, research and development, sales and service capabilities. Before the suit and proposed decree were filed, Halliburton sold its 36 percent interest in M-I Drilling to Smith International, Inc. Without that divestiture, the merger would have caused Halliburton to own both this 36 percent stake in M-I andone of M-I's principal competitors, Dresser's Baroid Division. M-I and Baroid are the two largest drilling fluids competitors in a $3 billion business. Drilling fluids, a combination of chemical compounds and minerals, are the second largest cost -- after rental of the rig -- of drilling for oil and natural gas, and are critical for cooling and lubricating the drill bit and controlling downhole pressure. The decree is awaiting entry by the court.
During fiscal year 1998, the Division investigated 16 bank merger transactions for which divestiture was required prior to or concurrently with the acquisition. A "not significantly adverse" letter conditioned upon a letter agreement between the parties and the Division was sent to the appropriate bank regulatory agency in all instances.(20)
2. Federal Trade Commission
The Commission challenged 33 transactions that it concluded would lessen competition if allowed to proceed as proposed during fiscal year 1998, leading to 23 consent orders, one administrative complaint and six abandoned transactions. The Commission authorized its staff to seek injunctive relief in three of the 33 matters. The parties abandoned the transactions in two of these cases following the court decision; in one of these cases, an administrative complaint was issued.
In Cardinal Health, Inc., and Bergen Brunswig Corp.,(21) the Commission filed for a preliminary injunction in March 1998 alleging that the proposed $2.5 billion acquisition by Cardinal Health, Inc.("Cardinal") of Bergen Brunswig Corp. ("Bergen") would lessen competition substantially in the wholesale distribution of prescription drugs.(22) Cardinal was the nation's third largest wholesale distributor of prescription drugs, over-the-counter pharmaceutical products and health and beauty aids. Bergen was the country's largest supplier of pharmaceuticals to the managed care market and the second largest wholesale distributor of pharmaceuticals. The court granted the Commission's motion blocking the proposed acquisition on July 31, 1998. Subsequently, the parties abandoned the transaction.
In McKesson Corp., and AmeriSource Health Corp.,(23) the Commission filed for a preliminary injunction in March 1998 alleging that the proposed $2.25 billion acquisition by McKesson of AmeriSource Health Corp. ("AmeriSource") would lessen competition substantially in the wholesale distribution of prescription drugs. McKesson was the largest full-service wholesale distributor of prescription drugs in the United States and Canada. AmeriSource was the fourth largest wholesale distributor of pharmaceutical products and related health care services in the country. The court granted the Commission's motion blocking the proposed acquisition on July 31, 1998. Subsequently, the parties abandoned the transaction.
