In the last two weeks of 2016, both the Antitrust Division of the US Department of Justice (DOJ) and the US Federal Trade Commission (FTC) settled investigations into two separate asset swap deals. While companies may think that they are in the antitrust clear with asset swap transactions, the consent decrees make it clear that both the DOJ and FTC will examine carefully these types of deals and will apply the same rigorous antitrust analysis as they would in a traditional merger or acquisition.

Asset swap transactions also can be targets for civil litigation as restraints of trade under Section 1 of the Sherman Act. In 2003, the DOJ challenged an asset swap between two alternative newspapers as a per se illegal market allocation agreement,1 and to settle the litigation, required significant divestitures from the parties to try to re-establish the status quo.2 Private parties also may challenge asset swap transactions. In 2008, a grocery store operator filed a class action lawsuit against SuperValu, a grocery wholesaler, alleging that its 2003 asset swap with C&S, another grocery wholesaler, was an unlawful customer and territorial allocation agreement.3 The Eighth Circuit reversed and remanded the district court’s grant of summary judgment, holding that a genuine issue of material fact existed as to whether the agreement was per se unlawful, the definition of the relevant market, and the injury that occurred.4 This case remains in litigation, although the parties are scheduled for a settlement conference in February 2017.

DOJ Moves to Protect the Market for Outdoor Billboards

On December 22, 2016, the DOJ announced a settlement relating to an investigation of an asset swap between Clear Channel Outdoor Holdings, Inc. and Fairway Media Group, LLC.5 In the swap, which is valued at $150 million, Clear Channel will acquire certain Fairway billboards located in Atlanta in exchange for Fairway acquiring certain Clear Channel billboards located in Indianapolis and other areas. Fairway also was to acquire additional billboards in Rochester, MN, and Clear Channel was to acquire additional billboards in Atlanta, but the parties amended the deal to remove these assets, likely to try to smooth the path for antitrust clearance.

To settle the investigation, the DOJ required divestitures from both parties in Indianapolis and Atlanta to two separate buyers, each of which was approved up front by the DOJ. The DOJ also imposed restrictions on the parties, including: (1) a prohibition on reacquiring the divested assets for 10 years; (2) a prohibition on financing any part of the divestiture buyers’ purchase of the assets; and (3) an obligation to provide 30-days advance notice for certain future acquisitions that are not otherwise subject to the HSR reporting requirements.6 Note that the reporting obligations require Fairway and Clear Channel to notify the DOJ when they are acquiring assets in Rochester and Atlanta that originally were part of the swap but that were later voluntarily removed by the parties, meaning that the parties could not avoid the DOJ’s antitrust concerns in these markets even after restructuring their deal.

FTC Preserves Competition for Animal Health Products

Just six days after the Clear Channel/Fairway settlement was announced, on December 28, 2016, the FTC announced it had reached a settlement with Boehringer Ingelheim relating to an investigation of Boehringer’s blockbuster $13.53 billion asset swap with Sanofi.7 In that deal, Boehringer will acquire Merial, Sanofi’s animal care subsidiary, in exchange for which Sanofi will acquire Boehringer’s consumer health care business. The FTC focused on the animal vaccine market and required Boerhinger to divest its companion animal (cat and dog) vaccine business to Elanco, a division of Eli Lilly, and certain cattle and sheep vaccines to Bayer. Boehringer also is required to provide technical assistance to ensure that Elanco and Bayer will be able to independently manufacture the divested assets.8

Key Takeaways

These DOJ and FTC settlements, as well as the civil litigations, provide important lessons for companies considering asset swap transactions:

  • The parties should consider structuring the deal upfront to either eliminate or limit any potential antitrust concerns. Note, however, that the parties may not be able to avoid restrictions on any carved-out areas, as happened in Clear Channel/Fairway.
  • If there are areas of overlap that could raise antitrust concerns, the parties should have a game plan for divestitures, including considering an upfront divestiture. If doing so, the parties should be sure to have vetted fully the divestiture buyer to avoid agency concerns that the divested assets will either (1) lose their competitive value or (2) end up in the hands of one of the deal parties in the long run.
  • When considering potential areas of overlap, the parties should consider whether one of the swapping parties has the potential to enter a market, especially if the deal involves innovation industries (like pharmaceutical products or technology). In Boehringer/Sanofi, the FTC considered there to be an overlap in markets where Merial, Sanofi’s swapped asset, was the next most likely entrant.
  • When considering potential divestiture options, think about whether a mix-and-match divestiture, that is, a divestiture from each of the swapped assets or in each of the swapped geographies, makes sense. In both Clear Channel/Fairway and Village Voice/NT Media, the DOJ required the parties to divest assets in each of the geographic markets.
  • The parties should avoid having their deals contain other provisions, such as overly broad non-compete clauses, that could be viewed as being at odds with antitrust laws.
  • Asset swap transactions are not immune from civil litigation by either the agencies or by private plaintiffs. Parties contemplating asset swaps that may raise antitrust concerns should consider whether any customer or competitor would have cause to file suit in either state or federal court and have a game plan to handle such litigation.
1 Compl., United States v. Vill. Voice Media, LLC, Case No. 1:03-cv-0164 (N.D. Ohio filed Jan. 27, 2003),
2 Competitive Impact Statement, Village Voice, Case No. 1:03-cv-0164 (filed Feb. 3, 2003), In this agreement, the parties agreed to, among other things, shut down newspapers that competed with each other in Cleveland and Los Angeles. The DOJ required the parties to divest the assets used to publish papers that were shuttered, required the parties to allow advertisers to terminate certain contracts without penalty and imposed a five-year obligation to provide a 30-day notification period for future acquisitions of sales of alternative newspapers or advertising networks.
3 In re Wholesale Grocery Prods. Antitrust Litig., 752 F.3d 728, 729-32 (8th Cir. 2014), cert. denied sub nom., SuperValu, Inc. v. D & G, Inc., 135 S. Ct. 2805 (2015)..
4 Id. at 733-35.
5 Press Release, DOJ, “Clear Channel Outdoor and Fairway Media Group Required to Divest Billboards in Order to Complete Asset Swap Transaction” (Dec. 22, 2016),
6 Competitive Impact Statement, United States v. Clear Channel Outdoor Holdings, Inc. Case No. 1:16-cv-02497 (D. D.C. filed Dec. 22, 2016),
7 Press Release, FTC, “FTC Requires Divestitures as Condition to Proposed $13.53 Billion Deal between German Pharmaceutical Boehringer Ingelheim and Paris-based Sanofi” (Dec. 28, 2016),
8 Analysis of Agreement Containing Consent Orders to Aid Public Comment, In re C.H. Boehringer Sohn AG & Co KG, FTC File No. 161-0077 (Dec. 28, 2016),