Archive for the ‘Mergers & Acquisitions’ Category

Mate & Switch: What Happened at Duke Energy?

Photo by Colin Kinner. Some rights reserved.

That’s the question the North Carolina Utilities Commission is asking. The NCUC has scheduled additional hearings on Thursday and Friday to ask questions and listen to testimony from several board members and executives from Duke regarding its recently completed merger with Progress Energy.  

The merger, which underwent a lengthy consideration process with multiple regulators over the past year and was approved by the NCUC on June 29th, closed on July 2nd. A day later, Duke announced that its CEO prior to the merger, Jim Rogers, would be the CEO of the new company. The problem? Prior to that announcement, documents filed with the SEC indicated that the new company’s CEO would be Bill Johnson, then CEO of Progress Energy. Johnson’s Duke CEO employment agreement became effective on July 2nd, and on July 3rd, according to his separation agreement (both included in an 8-K filing with the SEC), he resigned “…from his employment with Duke Energy, from his position as a member of the Board of Directors of Duke Energy, and from all other positions …  with respect to Duke Energy and its subsidiaries or affiliates.”  The circumstances around the switch remain nebulous – a mystery that the North Carolina regulators are hoping to get to the bottom of at this week’s hearings. Last week, Jim Rogers testified that Duke’s board had misgivings about Johnson as the closing of the deal drew near. It remains to be seen what Johnson will have to say about his sudden departure when he testifies later this week.

FERC Drops Plans for Changes to Horizontal Merger Policies

Almost one year ago, FERC solicited the public: Should FERC revise its approach to examining horizontal market power concerns?

Well, should they? I’m not sure. Will they? No.

“[A]fter reviewing the comments received, the Commission has decided to retain its existing policies regarding the analysis of horizontal market power when reviewing transactions under section 203 of the FPA and in its electric market-based rate program. Accordingly, we will terminate the proceeding in Docket No. RM11-14-000.”

Thus read the February 16 Order terminating the rulemaking that might have implemented such changes.

The decision means that FERC’s approach will remain somewhat “stringent,” as some of the proposed changes to FERC’s horizontal merger policies involved adopting the more “flexible” Horizontal Merger Guidelines that were issued by the DOJ and FTC in 2010.

Morgan Lewis has more details here.

Revising FERC’s Horizontal Merger Policies

Photo by Aidan Jones. Some rights reserved.

Law firm memos are abuzz with information on FERC’s recent Notice of Inquiry (NOI), which requests comments on whether – and how – to revise their approach to examining horizontal market power concerns.

The question of revision was sparked by last year’s Horizontal Merger Guidelines – a document issued jointly by the FTC and DOJ that set forth how those two agencies in particular will evaluate the impact of horizontal mergers on competition in various markets. The guidelines flesh out in what ways the agencies can “identify and challenge competitively harmful mergers while avoiding unnecessary interference with mergers that are either competitively beneficial or neutral.”

FERC has a similar directive – pursuant to Section 203(a)(4) of the Federal Power Act (16 USC 824b) – to evaluate and subsequently approve or block proposed mergers by public utilities. However, FERC’s current merger policies incorporate guidelines from DOJ and FTC that were issued almost twenty years ago.

Specifically, the March 17th NOI asks whether or not FERC’s current approach should be amended to reflect FTC and DOJ’s new 2010 merger guidelines, and what impact, if any, those guidelines should have “on the Commission’s analysis of horizontal market power in its electric market-based rate program.”

Want more details? You’ve got your choice of well-written memos from White & Case, Alston + Bird, Dewey & LeBoeuf, and Bracewell & Giuliani.

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