http://www.nytimes.com/2002/07/31/business/company-news-wr-grace-and-sealedair-lose-ruling-in-fraud-suit.html?

ref=topics
Key Dates:
1960:
Inventors of Bubble Wrap cushioning, originally called AirCap, found Sealed Air
Corporation; $85,000 is raised through an initial public offering.
1961:
Production of AirCap material begins in earnest.
1970:
Expansion beyond the United States begins with the acquisition of Smith Packaging
Ltd., later renamed Sealed Air of Canada, Ltd.
1971:
Company begins selling Mail Lite cushioned shipping envelopes; T.J. Dermot Dunphy
is named company CEO.
1977:
Instapak Corporation, makers of a "foam-in-place" cushioning system, is acquired.
1983:
Sealed Air purchases Cellu-Products Co., maker of thin-grade polyethylene foam,
coated films, and other plastic and paper packaging products; first foray into food
packaging comes via the purchase of the Dri-Loc absorbent pad product line.
1987:
Jiffy Packaging Corporation, producer of padded mailers for such items as floppy
disks and books, is acquired.
1989:
Company effects a leveraged recapitalization to ward off takeover bids and sharpen
the firm's focus.
1994:
Acquisition of a French firm adds the Fill Air line of inflation-based packaging to the
fold.
1995:
New Zealand-based Trigon Industries Limited is acquired, nearly doubling Sealed
Air's food packaging operations.
1998:
Sealed Air merges with the Cryovac food-packaging business of W.R. Grace &
Company.
2002:

Company agrees to pay $834 million to settle all current and future asbestos-related
claims connected with Grace.
Company History:
Sealed Air Corporation is one of the world's leading manufacturers of food,
protective, and specialty packaging materials. The company is best-known for its
protective packaging products, including AirCap and Bubble Wrap air cellular
cushioning materials; inflatable packaging products under the Fill-Air and Rapid Fill
brand names; Instapak, a system for injecting a protective, expanding polyurethane
foam into shipping cartons and other containers; and protective mailers and bags
sold under the Jiffy brand. Since its 1998 acquisition of the packaging business of
W.R. Grace & Company, however, Sealed Air has derived the majority of its
revenues from its line of food packaging products, mainly marketed under the
Cryovac trademark. These items, which include shrink bags and films, laminated
films, foam and solid plastic trays and containers, and absorbent pads, are used to
package a wide variety of perishable foods, such as cheeses, produce, poultry, and
fresh, smoked, and processed meat. The company has operations in 50 countries,
though its products are distributed in many more. The United States accounts for
about 55 percent of net sales; Europe, the Middle East, and Africa, 26 percent; the
Asia-Pacific region, 10 percent; Latin America, 7 percent; and Canada, 3 percent.
Bubble Wrap Beginnings
Sealed Air was founded by U.S. engineer Alfred W. Fielding and Swiss inventor Marc
A. Chavannes, the two men who gave the world Bubble Wrap. The
product, first developed in 1957, was initially created in response to a client's
request for a new type of plastic wallpaper. When that idea fizzled, the pair found
some success marketing the product as a greenhouse insulator. They finally
stumbled onto the idea of adapting it for the packaging market. After a few years of
tinkering with manufacturing methods and hustling for seed capital, Fielding and
Chavannes launched Sealed Air Corporation in 1960. With $85,000 raised through
an initial public stock offering, production of the AirCap material began in earnest
the following year. In its earliest form AirCap packaging material suffered from
slightly leaky bubbles. In spite of the problems, however, the product gained
popularity throughout the 1960s, and by the middle of the decade research efforts
had led to the development of a special coating that prevented the bubbles from
losing air. By 1969 Bubble Wrap was beginning to catch on. For that year, Sealed Air
reported sales of $4 million. This represented nearly the entire market for Bubble
Wrap, because the product was still proprietary at the time.
In 1970 Sealed Air suffered a small deficit, despite continuing gains in sales. In the
face of criticism from some members of the company's board, President Ted Bowers
suddenly resigned. To replace him, the board turned to one of its members, T.J.
Dermot Dunphy, an Irishman who had studied at Oxford and at Harvard Business
School. Dunphy, who became CEO in 1971, had arrived on the Sealed Air board two
years earlier after selling his own small packaging company, Custom-Made
Packaging (which sold popsicle wrappers and the like), to Hammermill Paper. With
cash on hand from that sale, Dunphy had asked friends at the investment firm
Donaldson, Lufkin & Jenrette to find a public company for him to lead. Bowers's
unexpected departure created that opportunity at Sealed Air.
Just prior to the beginning of the Dunphy era, Sealed Air had added a set of
products to its line. By laminating AirCap cushioning material to kraft paper, the

company developed its Mail Lite shipping envelopes, first sold in 1971. A smaller,
cheaper version of Mail Lite called Bubble-Lite was introduced a few years later. The
company also became international around this time, with the 1970 acquisition of
Smith Packaging Ltd., later renamed Sealed Air of Canada, Ltd. Under Dunphy, the
company's minor stumble of 1970 was quickly reversed, and by 1972 Sealed Air's
sales had passed the $10 million mark. Another new product, PolyMask, was
introduced in 1973. PolyMask, a pressure sensitive polyethylene film for protecting
delicate surfaces against scratches, was the first Sealed Air product not based on its
air bubble technology. For 1973, the company's after-tax profits topped $1 million
for the first time. Of its $13.6 million in sales for that year, about 60 percent came
from AirCap and about 20 percent from Mail Lite. The rest came mostly from the
manufacture and distribution of a variety of packaging products by its Canadian
subsidiary. The company's biggest customer was the electronics industry, which
accounted for about 40 percent of sales.
Sealed Air made its first foray into Europe in 1973, acquiring 10 percent of Sibco
Universal, S.A., a French manufacturing firm. Over the next few years, Sealed Air
bought the rest of Sibco. During the mid-1970s Sealed Air's researchers came up
with another innovative use for the company's air cell technology. The Sealed Air
Solar Pool Blanket was essentially a big sheet of Bubble Wrap that was placed
on swimming pools. The Solar Pool Blanket allowed the sun's rays to heat the water
and sharply reduced the evaporative loss of water and treatment chemicals. By
1977 the Solar Pool Blanket was generating 6 percent of company sales. As an
offshoot of the pool blanket, the company also began making a roof-mounted
solar water heater designed mainly for heatingswimming pools.
Expansion Through Acquisition: Late 1970s and 1980s
The most important development of 1977 was the acquisition of Instapak
Corporation, producers of a revolutionary "foam-in-place" cushioning system. The
foam-in-place process, initially conceived in the 1950s by engineers at Lockheed
Corporation, involves surrounding a product with urethane in a liquid form that
would then quickly expand into a semirigid foam. The idea was finally made
practical in 1969 by inventor Richard Sperry (whose grandfather, Elmer Sperry,
invented the gyroscope). Instapak was made a division of Sealed Air, and it quickly
became one of the company's most important products, generating almost as great
a share of total sales as Bubble Wrap by the end of the decade. Foreign sales also
increased dramatically during the second half of the 1970s, accounting for nearly a
quarter of the company's total by 1977. By 1979 Sealed Air's annual sales had
grown to more than $70 million.
By the beginning of the 1980s, foam-in-place was clearly a product destined for
bigger things, and Sealed Air still had virtually no competition in the area. The pool
blankets were also doing well, selling as fast as the company could make them. In
1981 Sealed Air added PolyCap to its product line. PolyCap was essentially a lowercost, less durable version of AirCap, without the barrier coating, providing a less
expensive option for products that required only a relatively short period of
protection. Sealed Air broadened its product line further in 1983 by purchasing
Cellu-Products Co., a Hickory, North Carolina, manufacturer of packaging materials,
for $20 million. The Cellu-Products acquisition added thin-grade polyethylene foam,
coated films, and other plastic and paper materials to the company's growing
collection of packaging products. Sealed Air also gained its first presence in the food
packaging segment in 1983 through the acquisition of the Dri-Loc line of absorbent

pad products, which were used underneath meat, fish, and poultry sold in
supermarkets. Although the recession of 1982 took a bite out of Sealed Air's
revenue and earnings figures, the emergence of personal computers and other
related electronic gizmos brought a new wave of business, and by 1983 the
company's sales had grown to $124 million.
In an effort to diversify its product line further, and in part to prepare itself for the
impending expiration of its Bubble Wrap patents, Sealed Air acquired several
smaller companies during the middle part of the 1980s. In 1984 the company
acquired Cortec Corporation, a small anticorrosive chemical firm. Cortec was sold off
only a few years later, after being caught illegally shipping chemicals to Libya.
Other acquisitions that yielded happier results included Static, Inc., in 1985; a
Canadian spa manufacturer in 1987; and a Swedish packaging company in 1987.
More important was the company's 1987 purchase of Jiffy Packaging Corporation,
which manufactured padded mailers for items such as floppy disks and books. The
addition of Jiffy solidified Sealed Air's dominant position in the protective mailer
market. The year 1987 also saw company cofounders Fielding and Chavannes both
retire from the firm. During this period, Sealed Air also began incorporating recycled
materials into a number of its air bubble and paper packaging products, at a time
when few companies in the industry were doing so.
By 1988 Sealed Air had annual sales of $346 million, and it earned $42 million in
profit that year. All told, $127 million of the company's sales came from Instapak,
which by this time had more or less replaced Bubble Wrap as the flagship product.
Meanwhile, Sealed Air's researchers, as well as freelancer Sperry (who had
developed Instapak), kept busy at the drawing board. One new wrinkle was a pair of
systems called Instapacker and VersaPacker, which could produce bags full of
protective foam at the touch of a button.
Dunphy pulled off a remarkable financial maneuver in 1989. The company had been
so profitable over the previous few years that it found itself with a huge cash
surplus. Because Dunphy could not find any more companies that he felt were good
acquisition candidates, he had no obvious outlets for this cash buildup. In order to
avoid becoming too attractive a target for a takeover, as well as to create what he
called a "controlled crisis" to shake his managers out of their complacency, Dunphy
decided to give the money away. He announced a $40-per-share special dividend,
amounting to a $328 million gift to shareholders. The move increased the
company's long-term debt from $19 million to over $300 million, made up of a
combination of bank loans and junk bonds.
Dunphy hoped that leveraging the company would push it to new heights of
efficiency, and he was correct. The new debt situation necessitated changes in the
way the company handled inventory and led to other cost-cutting measures. These
changes enabled the company to begin repaying its debts ahead of schedule,
creating further savings. At the same time, an unexpected reduction in the cost of
raw materials resulted in yet more opportunities to work down part of the debt with
extra cash. By the early 1990s it was clear that the gamble had paid off, and Sealed
Air was ready to go shopping once again. In 1991 the company acquired a small
company called Korrvu, which produced transparent suspension packaging--an
innovative product that protects fragile items in a trampoline-like membrane.
Sentinel Foam & Envelope Corporation, a packaging firm based in Philadelphia, was
also acquired that year.
Significant International Expansion: Early to Mid-1990s

Sealed Air's sales figures stalled somewhat during the first part of the 1990s,
advancing from $413 million in 1990 to only $452 million in 1993. Nevertheless, the
company was able to generate solid profits each year. In order to boost revenue,
Dunphy began concentrating heavily on worldwide expansion. Instapak was
introduced in Mexico, and the company opened manufacturing facilities in Germany
and Spain. Throughout, the company continued to emphasize research and
development, and new products were unveiled at a steady pace. One such product
was Floral, introduced in 1993. Floral was a foam that served as a base in artificial
flower arrangements. Within a year of its first appearance, Floral was generating
sales in the neighborhood of $5 million.
As the 1990s continued, Sealed Air made additional strategic acquisitions. In 1993
the company purchased the Shurtuff Division of Shuford Mills, Inc. Shurtuff's
extremely durable plastic-based mailers meshed well with Sealed Air's existing
protective mailer product line. On the product front, the company developed a new
inflatable packaging system called VoidPak. The acquisition department was very
active in 1994. The company reinforced its European food pad business with the
purchase of Hereford Paper and Allied Products Ltd., an English food pad
manufacturing firm. Packaging companies based in Norway, France, and Italy were
also acquired during the year. The French acquisition added two product lines, SupAir-Pack and Fill Air, to the company's collection of inflation-based systems, an area
considered to hold great promise for the future. Toward the end of the year the
company reorganized its management structure so that its important product lines
were coordinated globally rather than country by country. This move reflected an
increasing focus on the international market, which was expected to continue
through the rest of the century. For 1994 sales numbers at Sealed Air made their
first significant jump in several years, exceeding $500 million for the first time in
company history. Earnings, at $31.6 million, reached record levels as well.
Sealed Air's biggest acquisition of this period came in January 1995, when it
acquired Trigon Industries Limited, a New Zealand company with operations in
Australia, England, Germany, and the United States, for $54.6 million. With annual
sales of $72 million, Trigon had an immediate and significant impact on Sealed Air's
balance sheet as well as on its geographic reach, providing a base for expansion in
the South Pacific. Trigon's lines of packaging films and systems for perishable foods
almost doubled Sealed Air's food packaging operations. Other Trigon products
included durable mailers and bags and specialty adhesive products.
The Trigon purchase was followed by the June 1996 acquisition of the Australian and
New Zealand protective packaging business of Southcorp Holdings Limited. This
further bolstered Sealed Air's position in the South Pacific, as the company saw its
overseas sales grow to nearly 40 percent of overall sales. In 1985, by comparison,
non-U.S. sales totaled only about 18 percent of total sales. By 1997 net sales at the
company reached $843 million, while operating profits were a record $138 million.
Late 1990s Merger with Cryovac
In March 1998 Sealed Air completed the biggest deal in its history, merging with the
Cryovac packaging business of W.R. Grace & Company in a complicated stock and
cash transaction valued at $4.9 billion. W.R. Grace transferred Cryovac to Sealed Air
in return for $1.26 billion, which was given to Grace's other subsidiaries. This group
of subsidiaries was spun off to shareholders as a separate publicly owned company
that assumed the W.R. Grace name. The merged Cryovac-Sealed Air entity became
a subsidiary of the old W.R. Grace, which was renamed Sealed Air Corporation. The

deal was undertaken in such a complex way both to ensure that it was done on a
tax-free basis and to shield Sealed Air from the mounting asbestos liabilities of one
of the spun-off Grace units, Grace Construction Products, which had made asbestoscontaining products.
The addition of Cryovac was a "dream" deal for Dunphy, who had held off on
discussions with Grace executives about a merger for two decades. The Cryovac
operations were in fact much larger than those of the old Sealed Air, and the
company saw its sales triple to more than $2.5 billion following the merger. Cryovac
specialized in food packaging products, making that segment Sealed Air's largest,
accounting for 60 percent of sales. The acquired lines were led by Cryovac itself, a
material used to vacuum-seal food packages. The deal also significantly enhanced
Sealed Air's worldwide profile, adding operations in nearly 20 more countries.
Following the merger, Sealed Air remained headquartered in Saddle Brook, New
Jersey, and Dunphy continued to serve as chairman and CEO.
A few months after the merger was consummated, Sealed Air announced that it
would eliminate about 750 jobs from its enlarged workforce of 14,500, a reduction
of more than 5 percent, as part of a restructuring program. The company combined
or eliminated certain small facilities and administrative support functions,
eliminated "layers of management," and centralized Cryovac's U.S. research
facilities. Charges associated with this restructuring totaled $111 million, reducing
net earnings for 1998 to $73 million.
Sealed Air continued its history of innovation in 1999, introducing VistaFlex
engineered inflatable packaging, which was designed as an alternative to
corrugated inserts and other premolded shapes and die-cuts used in high-volume
protective packaging applications. Also debuting that year was Instapak Quick, a
simplified version of the Instapak foam-in-bag product that was targeted at smaller
companies selling products over the Internet. The company also completed a
number of small acquisitions from 1999 to 2001. These included manufacturers of
air cellular cushioning products in Latin America, Asia, and South Africa and
producers of foam and solid plastic trays used in food packaging in Latin America,
Europe, and Australia. During the third quarter of 2000 a larger deal was finalized,
with Sealed Air paying about $119 million for Dolphin Packaging plc, a U.K. maker of
foam food trays. Another significant purchase was that of Shanklin Corporation, a
U.S. manufacturer of shrink film packaging equipment, in a deal completed later in
2000. In early 2000, meantime, Dunphy retired from the CEO position, while
remaining chairman. President and COO William V. Hickey, who had joined Sealed
Air in 1980, was promoted to president and CEO.
Asbestos-Related and Other Travails in the Early 2000s
By the early 2000s, some analysts were beginning to question the wisdom of the
Cryovac merger. The deal had greatly expanded Sealed Air's operations in Asia and
Europe, meaning that the company suffered in a more pronounced way from the
economic troubles in Asia that cropped up in the late 1990s and from the decline in
meat consumption in Europe that followed the outbreaks of mad cow and foot-andmouth disease. Even more ominously, the merger had left Sealed Air exposed to
potential liabilities related to asbestos claims, despite both the structure of the
merger, which had explicitly shielded Sealed Air from W.R. Grace's asbestos
exposure, and the fact that neither Sealed Air nor Cryovac had ever produced or
sold any products containing asbestos.

By 2000 Sealed Air had been named as a party in a number of lawsuits alleging that
the company was responsible for possible asbestos liabilities. The asbestos
claimants were suing both Sealed Air and W.R. Grace charging that Grace had
fraudulently transferred Cryovac's assets in order to shelter them from
Grace's asbestos liabilities. They further contended that Sealed Air was the true
successor to the "old" W.R. Grace and that without Cryovac the "new" Grace was
insolvent at the time of its spinoff because of the growing number of asbestos
lawsuits that it faced. Weighed down by these asbestos claims, W.R. Grace filed for
Chapter 11 bankruptcy protection in April 2001--a development that boded ill for
Sealed Air being exonerated from the charges. Meanwhile, in response to the
difficult operating environment engendered by the global economic downturn and
the aforementioned decline in meat consumption, Sealed Air in 2001 conducted
another restructuring, this one consisting of 470 job cuts, a $32.8 million charge,
and projected annual cost savings of $23 million.
Asbestos-related events dominated 2002. Sealed Air faced a federal fraudulenttransfer lawsuit that was in its pretrial phase. In late July the company suffered a
blow when the federal judge in the case issued a ruling that post-1998 asbestos
claims could be considered when determining whether the new W.R. Grace was
solvent when it transferred Cryovac to Sealed Air. The defendants had contended
that only claims pending at the time of the merger should be considered. This news
sent Sealed Air's stock plunging by 62 percent over a two-day period, although it
soon recovered somewhat. With the outcome of the trial, scheduled to begin in
early December 2002, in serious doubt, Sealed Air reached an agreement in late
November to settle all current and future asbestos-related claims. The company
agreed to pay $834 million in cash and stock into a trust that would be established
as part of the bankruptcy-reorganization plan of W.R. Grace. The trust would make
payments to asbestos victims on behalf of Grace and its former subsidiaries. To
cover the settlement costs and associated legal fees, Sealed Air recorded an $850.1
million charge at year-end, leading to a net loss for 2002 of $309.1 million. The
agreement, which appeared to represent an end to the company's asbestos
nightmare, put air back into the company's stock, sending it ballooning 56 percent
and returning it to where it was prior to the critical July 2002 pretrial ruling. Sealed
Air could now once again focus its full attention on developing and acquiring
innovative packaging products and successfully marketing them.
http://www.fundinguniverse.com/company-histories/sealed-air-corporation-history/

Asbestos was widely used as insulation and as a fire retardant, but scientists
found in the 1960s and 1970s that the inhalation of its fibers could cause lung
cancer and other diseases.

W.R. Grace & Co. and Sealed Air Corp. lost a court ruling that might make it easier for people
alleging asbestos injuries to prove the chemical maker fraudulently sold a food-packaging company
to Sealed Air in 1998.

A lawsuit against the companies alleges that Grace transferred its Cryovac division to Sealed Air in
1998 for $1.2 billion and stock in a move to shield assets from plaintiffs seeking payment for
asbestos-related injuries.
Attorneys for the plaintiffs say Grace sold Cryovac for less than its actual value, leaving the company
unable to pay the potential damages it faced from future asbestos lawsuits.
http://www.foxnews.com/story/2002/11/29/sealed-air-to-pay-846-million-in-asbestos-settlement/
Grace has said the sale price was fair and that it didn't foresee the subsequent flood of asbestos
claims that prompted its bankruptcy filing in April 2001.

Subsidiary:
A subsidiary is a business that is wholly or partially owned by another business,
sometimes called the parent company or holding company. The parent company owns
sufficient voting stock in the subsidiary -- as a rule, at least 50% -- to give it control over
the subsidiary's operations and management. In a wholly-owned subsidiary, the parent
company owns 100% of the stock.
A parent company with subsidiaries is one type of conglomerate, which is a company that
comprises multiple different businesses.

DEFINITION of 'Subsidiary'
A company whose voting stock is more than 50% controlled by another company, usually
referred to as the parent company or holding company. A subsidiary is a company that is
partly or completely owned by another company that holds a controlling interest in the
subsidiary company. If a parent company owns a foreign subsidiary, the company under
which the subsidiary is incorporated must follow the laws of the country where the
subsidiary operates, and the parent company still carries the foreign subsidiary's
financials on its books (consolidated financial statements). For the purposes of liability,
taxation and regulation, subsidiaries are distinct legal entities.
Read more: http://www.investopedia.com/terms/s/subsidiary.asp#ixzz3XOuMKXio
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Subsidiary
Auxiliary; aiding or supporting in an inferior capacity or position. In the law of
corporations, a corporation or company owned by another corporation that controls at
least a majority of the shares.
A subsidiary corporation or company is one in which another, generally larger,
corporation, known as the parent corporation, owns all or at least a majority of the shares.
As the owner of the subsidiary, the parent corporation may control the activities of the

subsidiary. This arrangement differs from a merger, in which a corporation purchases

another company and dissolves the purchased company's organizational structure and
identity.
Subsidiaries can be formed in different ways and for various reasons. A corporation can
form a subsidiary either by purchasing a controlling interest in an existing company or by
creating the company itself. When a corporation acquires an existing company, forming a
subsidiary can be preferable to a merger because the parent corporation can acquire a
controlling interest with a smaller investment than a merger would require. In addition,
the approval of the stockholders of the acquired firm is not required as it would be in the
case of a merger.
When a company is purchased, the parent corporation may determine that the acquired
company's name recognition in the market merits making it a subsidiary rather than
merging it with the parent. A subsidiary may also produce goods or services that are
completely different from those produced by the parent corporation. In that case it would
not make sense to merge the operations.Corporations that operate in more than one
country often find it useful or necessary to create subsidiaries. For example, a
multinational corporation may create a subsidiary in a country to obtain favorable tax
treatment, or a country may require multinational corporations to establish local
subsidiaries in order to do business there.
Corporations also create subsidiaries for the specific purpose of limiting their liability in
connection with a risky new business. The parent and subsidiary remain separate legal
entities, and the obligations of one are separate from those of the other. Nevertheless, if a
subsidiary becomes financially insecure, the parent corporation is often sued by creditors.
In some instances courts will hold the parent corporation liable, but generally the
separation of corporate identities immunizes the parent corporation from financial
responsibility for the subsidiary's liabilities.
One disadvantage of the parent-subsidiary relationship is the possibility of multiple
taxation. Another is the duty of the parent corporation to promote the subsidiary's
corporate interests, to act in its best interest, and to maintain a separate corporate identity.
If the parent fails to meet these requirements, the courts will perceive the subsidiary as
merely a business conduit for the parent, and the two corporations will be viewed as one
entity for liability purposes.
http://legal-dictionary.thefreedictionary.com/subsidiary+company
Federal Antitrust Regulation
Since the late nineteenth century, the federal government has challenged business
practices and mergers that create, or may create, a Monopoly in a particular market.
Federal legislation has varied in effectiveness in preventing anticompetitive mergers.
Sherman Anti-Trust Act of 1890 The Sherman Anti-Trust Act (15 U.S.C.A. 1 et seq.)
was the first federal antitrust statute. Its application to mergers and acquisitions has
varied, depending on its interpretation by the U.S. Supreme Court. In Northern Securities

Co. v. United States, 193 U.S. 197, 24 S. Ct. 436, 48 L. Ed. 679 (1904), the Court ruled
that all mergers between directly competing firms constituted a combination in restraint
of trade and that they therefore violated Section 1 of the Sherman Act. This decision
hindered the creation of new monopolies through horizontal mergers.
In Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 31 S. Ct. 502, 55 L. Ed.
619 (1911), however, the Court adopted a less stringent "rule of reason test"to evaluate
mergers. This rule meant that the courts must examine whether the merger would yield
monopoly control to the merged entity. In practice, this resulted in the approval of many
mergers that approached, but did not achieve, monopoly power.
Clayton Anti-Trust Act of 1914 Congress passed the Clayton Act (15 U.S.C.A. 12 et
seq.) in response to the Standard Oil Co. of New Jersey decision, which it feared would
undermine the Sherman Act's ban against trade restraints and monopolization. Among the
provisions of the Clayton Act was Section 7, which barred anticompetitive stock
acquisitions.
The original Section 7 was a weak antimerger safeguard because it banned only
purchases of stock. Businesses soon realized that they could evade this measure simply
by buying the target firm's assets. The U.S. Supreme Court, in Thatcher Manufacturing
Co. v. Federal Trade Commission, 272 U.S. 554, 47 S. Ct. 175, 71 L. Ed. 405 (1926),
further undermined Section 7 by allowing a firm to escape liability if it bought a
controlling interest in a rival firm's stock and used this control to transfer to itself the
target's assets before the government filed a complaint. Thus, a firm could circumvent
Section 7 by quickly converting a stock acquisition into a purchase of assets.
By the 1930s, Section 7 was eviscerated. Between the passage of the Clayton Act in 1914
and 1950, only 15 mergers were overturned under the antitrust laws, and ten of these
dissolutions were based on the Sherman Act. In 1950, Congress responded to postWorld
War II concerns that a wave of corporate acquisitions was threatening to undermine U.S.
society, by passing the Celler-Kefauver Antimerger Act, which amended Section 7 of the
Clayton Act to close the assets loophole. Section 7 then prohibited a business from
purchasing the stock or assets of another entity if "the effect of such acquisition may be
substantially to lessen competition, or to tend to create a monopoly."
Congress intended the amended section to reach vertical and conglomerate mergers, as
well as horizontal mergers. The U.S. Supreme Court, in Brown Shoe Co. v. United States,
370 U.S. 294, 82 S. Ct. 1502, 8 L. Ed. 2d 510 (1962), interpreted the amended law as a
congressional attempt to retain local control over industry and to protect small business.
The Court concluded that it must look at the merger's actual and likely effect on
competition. In general, however, it relied almost entirely on market share and
concentration figures in evaluating whether a merger was likely to be anticompetitive.
Nevertheless, the general presumption was that mergers were suspect.
In United States v. General Dynamics, 415 U.S. 486, 94 S. Ct. 1186, 39 L. Ed. 2d 530
(1974), the Court changed direction. It rejected any antitrust analysis that focused
exclusively on market-share statistics, cautioning that although statistical data can be of

great significance, they are "not conclusive indicators of anticompetitive effects." A

merger must be viewed in the context of its particular industry. Therefore, the Court held
that "only a further examination of the particular marketits structure, history, and
probable futurecan provide the appropriate setting for judging the probable
anticompetitive effect of the merger." This totality-of-thecircumstances approach has
remained the standard for conducting an antitrust analysis of a proposed merger.
Federal Trade Commission Act of 1975 Section 5 of the Federal Trade Commission Act
(15 U.S.C.A. 45), prohibits "unfair method[s] of competition" and gives the Federal
Trade Commission (FTC) independent jurisdiction to enforce the antitrust laws. The law
provides no criminal penalties, and it limits the FTC to issuing prospective decrees. The
Justice Department and the FTC share enforcement of the Clayton Act. Congress gave
this authority to the FTC because it thought that an administrative body would be more
responsive to congressional goals than would the courts.
Hart-Scott-Rodino Antitrust Improvements Act of 1976 The Hart-Scott-Rodino Antitrust
Improvements Act (HSR) (15 U.S.C.A. 18a) established a mandatory premerger
notification procedure for firms that are parties to certain mergers. The HSR process
requires the merging parties to notify the FTC and the Department of Justice before
completing certain transactions. In general, an HSR premerger filing is required when (a)
one of the parties to the transaction has annual net sales (or revenues) or total assets
exceeding $100 million and the other party has annual net sales (or revenues) or total
assets exceeding $10 million; and (b) the acquisition price or value of the acquired assets
or entity exceeds $15 million. Failure to comply with these requirements may result in
the Rescission of completed transactions and may be punished by a civil penalty of up to
$10,000 per day.
HSR also established mandatory waiting periods during which the parties may not
"close" the proposed transaction and begin joint operations. In transactions other than
cash tender offers, the initial waiting period is 30 days after the merging parties have
made the requisite premerger notification filings with the federal agencies. For cash
tender offers, the waiting period is 15 days after the premerger filings. Before the initial
waiting periods expire, the federal agency that is responsible for reviewing the
transaction may request the parties to supply additional information relating to the
proposed merger. These "second requests" often include extensive interrogatories (lists of
questions to be answered) and broad demands for the production of documents. A request
for further information may be made once, and the issuance of a second request extends
the waiting period for ten days for cash tender offers and 20 days for all other
transactions. These extensions of the waiting period do not begin until the merging
parties are in "substantial compliance" with the government agency's request for
additional information.
If the federal government decides not to challenge a merger before the HSR waiting
period expires, a federal agency is highly unlikely to sue at a late date to dissolve the
transaction under Section 7 of the Clayton Act. The federal government is not legally
barred from bringing such a lawsuit, but the desire of the federal agencies to increase

predictability for business planners has made the HSR process the critical period for
federal review. However, the decision of a federal agency not to attack a merger during
the HSR waiting period does not preclude a lawsuit by a state government or a private
entity. To facilitate analysis by the state attorneys general, the National Association of
Attorneys General (NAAG) has issued a Voluntary Pre-Merger Disclosure Compact
under which the merging parties can submit copies of their federal HSR filings and the
responses to second requests with NAAG for circulation among states that have adopted
the compact.
http://legal-dictionary.thefreedictionary.com/Mergers+and+Acquisitions

NH NGHA
L lut bo v cnh tranh bng cch khng cho php cc thng l c quyn hoc chng cnh
tranh.
Cho d ch c 40 tiu bang chp nhn o lut ny, cc b lut quan trng hn l nhng lut lin
bang sau:
(1) o lut nh Sherman nm 1890, cm c quyn, hn ch thng mi, cm tp on kinh
doanh (c gi l trusts) , cc t chc ny c to ra vi mc ch duy nht l chng cnh tranh.
(2) o lut ca U ban thng mi lin bang nm 1914, mt c quan c quyn quy nh v hot
ng thng mi gia cc bang, thm tra cc hot ng kinh doanh (ngoi tr nhng hot ng ca
ngn hng) v ban hnh cc lnh cng chiu ng lu l o lut ci tin lnh vc chng c
quyn l mt o lut tch bit nhm tng cng quyn lc ca chnh ph M trong vic thi hnh ba
lut nu trn.
(3) o lut Clayton nm 1914 l cc thng t b sung, sa i cm cc hp ng cu kt, lin kt
gia cacsban qun tr v mt s hnh thc thu tm ca cng ty m.

http://www.saga.vn/thuat-ngu/antitrust-laws-luat-chong-doc-quyen~297
Product Liability
The responsibility of a manufacturer or vendor of goods to compensate for injury caused by defective mer
chandise that it has provided forsale.

Lut trch nhim sn phm