Dell-EMC Merger

Compass Lexecon Senior Consultant Professor Daniel Rubinfeld and Compass Lexecon economists assisted Dell in securing regulatory approval of its acquisition of EMC for $67 billion. Compass Lexecon and Professor Rubinfeld were retained by the parties to analyze potential competitive effects arising from the merger, recognized to be the largest transaction in the technology industry to date. Professor Rubinfeld was supported by Duncan Cameron and Aren Megerdichian in developing a multi-period vertical foreclosure model to assess Dell’s postmerger incentive to close off access to VMware server virtualization software (partially owned by EMC) to its hardware rivals. The model captured the dynamics of customer switching over time in response to the hypothetical non-openness of the software after the merger. Their analysis showed that the share of lost server sales that would have to divert from Dell’s rivals to Dell as a result of the foreclosure strategy would have to be impossibly or implausibly high for the foreclosure strategy to be profitable. A presentation and paper were submitted to the Federal Trade Commission reflecting Compass Lexecon’s findings, and were also provided to the European Commission’s Directorate-General for Competition. Additional follow-up was prepared and submitted to the Commission addressing further inquiries related to the modeling, which continued to show little-to-no incentive for Dell to foreclose or otherwise disadvantage its hardware rivals. Professor Rubinfeld and his team worked with Dell’s counsel, including John Harkrider, Michael Keeley and Russell Steinthal of Axinn, Veltrop & Harkrider LLP, who noted that Compass Lexecon’s foreclosure analysis played an important role in securing unconditional approval of the transaction from the Federal Trade Commission and the European Commission.

Additionally, Christopher Fasel, Matt Krietzberg, Trevor Incerti and Jessica Stauffer in Compass Lexecon’s Pasadena office worked extensively with Dell/EMC’s domestic and international counsel to secure regulatory approval through numerous filings to competition agencies in nearly 20 jurisdictions, including the United States, Canada, Europe, Japan, Brazil and over a dozen other countries. This Compass Lexecon team worked with Daniel Bitton, Cagla Boylu, Alexander Bergersen, Michael O’Mara, Luis Nagalli and Kail Jethmalani of Axinn, Veltrop & Harkrider LLP; Paul McGeown and Aude Barthelemy of Wilson, Sonsini, Goodrich & Rosati; and Clifford Aronson, Michael Sheerin, Stephane Dionnet, Nick Wolfe and Amaury Sibon of Skadden, Arps, Slate, Meagher & Flom.