DOJ Challenges Consummated Asset Acquisition; Seeks Divestiture of Acquired Assets

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On December 18, the federal government sued to break up a consummated merger for the second time in two days. The Antitrust Division of the U.S. Department of Justice alleged that Microsemi Corporation’s acquisition of Semicoa, Inc. reduced competition in the development, manufacture, and sale of semiconductor devices used by the U.S. Department of Defense (DOD) and NASA. Coming on the heels of the Federal Trade Commission’s (FTC’s) suit to rescind Ovation Pharmaceuticals’s 2006 purchase of NeoProfen, the suit against Microsemi makes it clear that transactions that are not reportable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) can be vulnerable to challenge after they have closed.

Microsemi paid $25 million to acquire Semicoa in July 2008, including technology and manufacturing assets for “small signal transistors” and “ultrafast recovery diodes” that the DOD and NASA buy for military and aerospace applications essential to national security. Semicoa and Microsemi were the only two manufacturers of small signal transistors that can meet the DOD’s and NASA’s specifications, and two of three manufacturers of ultrafast recovery diodes that meet defense and NASA specifications. The Antitrust Division claims that the acquisition caused prices to increase “significantly” and reduced Microsemi’s incentive to innovate.

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