Toyota Industries and Cascade Corporation Transaction
Analysis Group and our affiliate, Edward Snyder, assisted Toyota Industries Corporation (TICO), a manufacturer of lift trucks, in its vertical acquisition of Cascade Corporation, a manufacturer of state-of-the-art lift truck attachments. In its review, the US Department of Justice (DOJ) raised concerns that the vertical transaction would result in exclusionary conduct and that Cascade might withhold its specialized attachments from TICO's lift truck competitors. As part of its analysis, the DOJ developed a merger simulation model to predict the likely competitive effects of the acquisition. However, Professor Snyder, supported by an Analysis Group team led by President Pierre Cremieux and including Managing Principals Andrea Okie and Marc Van Audenrode, affiliate David Mishol, and Vice President Markus von Wartburg, found that the DOJ's simulation model contained several factually inaccurate assumptions, particularly regarding input substitution. Professor Snyder and the Analysis Group team analyzed upward pricing pressure and developed a state-of-the-art vGUPPI tool that enables quick testing of alternative assumptions in vertical mergers or acquisitions. The analysis demonstrated that more accurate assumptions removed any indication that TICO would have incentives to engage in exclusionary conduct. Professor Snyder also provided a combination of descriptive and econometric analysis of a prior vertical acquisition by TICO to convince the DOJ that TICO had not attempted to exclude competitors following that acquisition and would have no incentive to do so in this acquisition. The transaction was allowed to proceed without restrictions.