Antitrust Law Daily U.S. consent decree allowing Iron Mountain/Recall merger approved
Monday, November 14, 2016

U.S. consent decree allowing Iron Mountain/Recall merger approved

By Jeffrey May, J.D.

A U.S. consent decree permitting the combination of Iron Mountain Inc.—the largest records management company in the United States—and Recall Holdings Ltd.—the nation’s second largest records management service—subject to divestitures was found to be in the public interest. Under the terms of the consent decree, the merging parties were required to divest Recall records management assets in 15 metropolitan areas where the Department of Justice Antitrust Division believed that the likely effect of the acquisition would be to lessen competition substantially for the provision of hard-copy records management services (U.S. v. Iron Mountain Inc., November 11, 2016, Mehta, A.).

The Antitrust Division filed a complaint in the federal district court in Washington, D.C. in March, challenging the proposed transaction. At the same time, the Antitrust Division filed a proposed consent decree, which if approved by the court, would resolve the government’s case.

Iron Mountain and Recall both offer records management services (RMS)–storing, protecting and organizing large volumes of hard-copy records at secure, off-site locations–in many cities across the United States. According to the government’s complaint, the transaction, as initially agreed to by the defendants, would have lessened competition substantially in the provision of RMS in 15 relevant markets. Those 15 metropolitan areas are Detroit, Michigan; Kansas City, Missouri; Charlotte, North Carolina; Durham, North Carolina; Raleigh, North Carolina; Buffalo, New York; Tulsa, Oklahoma; Pittsburgh, Pennsylvania; Greenville/Spartanburg, South Carolina; Nashville, Tennessee; San Antonio, Texas; Richmond, Virginia; San Diego, California; Atlanta, Georgia; and Seattle, Washington.

Terms of consent decree. Under the terms of the consent decree, the parties were required to divest, as viable ongoing business concerns, Recall RMS assets in all 15 geographic markets. In geographic markets other than Atlanta, the defendants intend to divest all of Recall’s RMS assets. In Atlanta, most, but not all, of Recall’s RMS facilities will be divested, since the facilities to be divested have been deemed sufficient to serve all of Recall’s local customers in Atlanta and to compete for new business in the area. In 13 of the 15 markets, the assets will be divested to Access CIG, LLC.

Public interest determination. In reaching its conclusion that the consent decree was in the public interest, the court considered the clarity of the proposed final judgment, the sufficiency of its enforcement mechanisms, and the competitive impact on third parties. The court was satisfied that the final judgment reflected the "degree of precision" necessary to resolve any subsequent disputes that might arise concerning the final judgment’s implementation. Moreover, the settlement contained sufficient enforcement mechanisms to ensure a complete sale of the divestiture assets. Lastly, the planned divestiture was likely to neutralize any anticompetitive effects of the merger.

Although National Records Centers, Inc. (NRC)—a competitor in multiple markets—objected to the proposed approval of the merger and suggested additional relief, the government had provided a sufficient factual basis that its proposed relief was adequate to remedy the alleged harms. None of NRC’s comments altered the court’s determination that the proposed Final Judgment satisfies the "public interest" standard.

The case is No. 1:16-cv-00595-APM.

Attorneys: Soyoung Choe, U.S. Department of Justice, for the United States. Laura A. Wilkinson (Weil, Gotshal & Manges LLP) for Iron Mountain Inc. William Blumenthal (Sidley Austin LLP) for Recall Holdings Ltd.

Companies: Access CIG, LLC; Iron Mountain Inc.; Recall Holdings Ltd.; National Records Centers, Inc.

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