Purging Ancient Decrees From the Books Isn't Easy

By Cindy Skrzycki
Tuesday, September 2, 2008

It's been almost a half-century since U.S. Justice Department antitrust regulators and True Temper, one of the world's largest makers of golf club shafts, settled a case in which the company agreed not to fix prices and carve up sales territories.

In the 1950s, the company commanded 90 percent of steel golf shaft sales. Now, the Memphis-based private company, renamed True Temper Sports, has 34 percent of the market and faces stiff domestic and international competition in the steel and graphite golf shaft business.

"The market is completely different," said Jason Jenne, True Temper's chief financial officer. "It's a mature industry with real competition. It's not a cottage industry like it was then."

So earlier this year, the company asked that the ancient decrees be terminated, and on Aug. 15, a federal judge in Chicago approved the company's request and lifted the judgments from 1959 and 1961.

The Justice Department changed its policy in 1980, saying future antitrust settlements would last 10 years. Still, more than 1,000 cases predating the policy change are in effect because firms went out of business or don't want to pay the legal bills for seeking termination.

Only about 15 of the perpetual consent decrees have been lifted in the past decade, according to Gina Talamona, a Justice Department spokeswoman.

Usually, a specific business issue prompts a company to initiate the legal gymnastics to get an antitrust judgment taken off the books. In the case of True Temper, the decrees became a problem when private-equity firms interested in investing in the company discovered the antitrust cases as they conducted due diligence.

They also found that one of the attorneys representing True Temper in the cases was Robert Bork, who later became a federal judge, antitrust scholar and a failed nominee to the Supreme Court.

The company, now owned by senior management and New York private-equity firm Gilbert Global Equity Partners, decided to try to get the judgments lifted.

"This is pretty specialized," said Phillip Zane, an attorney with Baker Donelson Bearman Caldwell & Berkowitz in Washington, who represented True Temper. "You go into it knowing there will be an investigation. It takes five to 10 years to lift, and it ain't cheap."

In its filings with the court, True Temper said the decrees were preventing it from adopting pricing and advertising strategies that its competitors use to promote their graphite shafts to millions of golfers in the United States and overseas.

True Temper said it lost $33.5 million last year and credit-rating companies downgraded its debt. Sales have rebounded, the company said, to $37.7 million for the second quarter from $33 million for the same period in 2007.

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