Mergers and Acquisitions

Don’t Hold Back: FTC Offers New Guidance on HSR Filing Obligations

As discussed previously on this blog, the Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires parties to certain proposed transactions to submit detailed premerger notification filings and wait for clearance before consummating the deal. To facilitate the antitrust review, merging companies that meet the HSR thresholds are required to submit a wealth of information about their businesses and the proposed transaction, including annual reports, market analyses, and agreements and other documents bearing on the deal. Despite these broad requirements, the FTC found that some merging companies were withholding side agreements relevant to the antitrust review process on the theory that they were ancillary to the main agreement and/or protected by a common interest privilege or joint defense agreement. READ MORE

Antitrust Analysis of Joint Ventures: How Big Is Too Big?

In the first post in this series, we introduced the concept of joint ventures (“JVs”), outlined why antitrust law applies to their formation and operation, identified the major antitrust issues raised by JVs, and discussed why you should care about these issues.  In the second installment, we unpacked some of the major antitrust issues surrounding the threshold question of whether a JV is a legitimate collaboration.  The third post in the series discussed ancillary restraints–what they are and how they are analyzed. READ MORE

Getting in Sync with HSR Timing Considerations

Word 'M&A' of the yellow square pixels on a black matrix background. Mergers and acquisitions concept. Getting in Sync with HSR Timing Considerations

A common question for companies contemplating mergers or acquisitions is how the Hart-Scott-Rodino process works and how long it takes for different kinds of transactions to be reviewed and cleared. The FTC posted a helpful article here today which provides practitioners with guidance regarding timing parameters under the HSR Act, including a helpful HSR timeline graph which can be accessed here.

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European Competition Authorities Crack Down on Violations of Merger Control Procedural Rules

Is a wind of change blowing through the European merger control enforcement landscape?

The response is yes, certainly.

Very recent cases or investigations launched by the European Commission alleging potential violations of merger control procedural rules by notifying parties have sent a clear signal to companies: you’d now better think twice before breaking the merger control procedural rules.

It is even truer when one considers that this may well be a trend throughout Europe. These cases have echoed back to recent similar cases, pending or closed, at the member state level (the Altice case in France, the CEE Holding Group limited/ Olympic International Holdings Limited case in Hungary, the AB Kauno Grudai / AB Vievio Paukstynas case in Lithuania, and a very recent bakery case in Slovakia). READ MORE

Antitrust Analysis of Joint Ventures: Ancillary Restraints

In the first post in this series, we introduced the concept of joint ventures (“JVs”), outlined why antitrust law applies to their formation and operation, identified the major antitrust issues raised by JVs, and discussed why you should care about these issues. In the second installment, we unpacked some of the major antitrust issues surrounding the threshold question of whether or not a JV is a legitimate collaboration. This third post in the series discusses ancillary restraints—what they are and how they are analyzed. READ MORE

Antitrust Analysis of Joint Ventures: Structural Considerations

Businessman hand touching JOINT VENTURE sign with businesspeople icon network on virtual screen Antitrust Analysis of Joint Ventures Antitrust Analysis of Joint Ventures – Structural Considerations

In the first post in this series, we introduced the concept of joint ventures (“JVs”), outlined why antitrust law applies to their formation and operation, identified the major antitrust issues raised by JVs, and discussed why you should care about these issues. In this installment, we will unpack some of the major antitrust issues surrounding the threshold question of whether or not a JV is a legitimate collaboration.  In particular, we will first try to separate the analyses of, on the one hand, JV formation, and on the other, JV operation and structure.  Then we will consider whether a JV (i) constitutes a “naked” agreement between or among competitors which is per se unlawful, (ii) presents no significant antitrust issue because there is only a single, integrated entity performing the JV functions, or (iii) involves restraints within the scope of a legitimate collaboration that are virtually per se lawful.

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Makan Delrahim Likely to Follow Conservative Path at DOJ Antitrust Division

Headshot of Delrahim Makan in front of the U.S. Captiol Makan Delrahim Likely to Follow Conservative Path as Chief of DOJ Antitrust Division

Last week, President Trump nominated Makan Delrahim to serve as the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice. Mr. Delrahim, who is currently serving as White House Deputy Counsel, is a former lobbyist and veteran of the George W. Bush Justice Department.  He served as Deputy Assistant Attorney General for International from 2003–2005.  Mr. Delrahim had a good working relationship with the career staff who he will now rely upon to advance the Trump Administration’s antitrust enforcement agenda and priorities.

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DOJ and FTC Stand Their Ground on Comity Policy Despite Second Circuit’s Decision in Vitamin C Case

International Flags on poles DOJ and FTC Stand Their Ground on Comity Policy Despite 2d Circuit’s Decision in Vitamin C Case

Last September, we discussed the U.S. Court of Appeals for the Second Circuit’s opinion in In re Vitamin C Antitrust Litigation vacating a $147 million judgment against Chinese vitamin C manufacturers based on the doctrine of international comity.  That case stemmed from allegations that the defendants illegally fixed the price and output levels of vitamin C that they exported to the United States.  In reversing the district court’s decision to deny the defendants’ motion to dismiss, the Second Circuit held that the district court should have deferred to the Chinese government’s explanation that Chinese law compelled the defendants to coordinate the price and output of vitamin C.

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Antitrust Analysis of Joint Ventures: An Introduction

Businessman hand touching JOINT VENTURE sign with businesspeople icon network on virtual screen Antitrust Analysis of Joint Ventures Antitrust Analysis of Joint Ventures – Structural Considerations

Joint ventures (“JVs”) can require navigation of a potential minefield of antitrust issues, which we’ll explore in a series of six blog posts beginning with this introductory post. Not all of the law in this area is entirely settled, and there remain ongoing debates about some aspects of the antitrust treatment of JVs.  Indeed, arriving at a coherent and unified view of JV law is like putting together a jigsaw puzzle with missing and damaged pieces.

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2017 HSR Filing Thresholds Announced

The Federal Trade Commission announced new 2017 premerger notification thresholds under the Hart-Scott-Rodino Act Image of word Mergers above abstract digital information to represent Business&Financial as concept.

The Federal Trade Commission has announced new (2017) premerger notification thresholds under the Hart-Scott-Rodino Act as follows:

Any acquisition of voting securities and/or assets requires premerger notification to the Federal Trade Commission and the Department of Justice under the HSR Act and the regulations promulgated thereunder (16 C.F.R. Sections 801 – 803) if the following tests are satisfied and if no exemption applies (15 U.S.C. Section 18a(a)(2)).  Where a premerger notification is required, both parties must file, the acquiring person must pay a filing fee ((i) $45,000 for transactions below $161.5 million, (ii) $125,000 for transactions of $161.5 million or more but less than $807.5 million, and (iii) $280,000 for transactions of $807.5 million or more) and the parties must observe a 30 day waiting period prior to closing.

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CMA Launches Consultation on Proposed Changes to De Minimis Exception in UK Merger Control Regime

On 23 January 2017, the UK Competition and Markets Authority launched a public consultation on possible changes to the de minimis exception. The proposed changes would increase the upper threshold for markets considered to be sufficiently important to justify a merger reference from £10 million to £15 million, and would raise the lower threshold for markets not considered to be sufficiently important from below £3 million to below £5 million. Handshake of businessmen - greeting, dealing, mergers and acquisition concept

The UK Competition and Markets Authority (“CMA”) has a duty to refer a transaction for an “in depth” phase 2 investigation in instances where it believes that there is a realistic prospect of a transaction resulting in a “substantial lessening of competition”, subject to certain exceptions. This includes a de minimis exception in markets of “insufficient importance”, where the costs involved in investigating the transaction would be disproportionate to the size of the market concerned.

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The FTC Expands the Scope of Documents Needed for an HSR Filing

As of November 28, 2016, the Federal Trade Commission expanded the filing obligations under teh Hart-Scott-Rodino (HSR) Act. Mergers and Acquisitisions Office folder on Desktop on table with Office Supplies and Ipad.

As of November 28, 2016, the Federal Trade Commission (FTC) has expanded the filing obligations under the Hart-Scott-Rodino (HSR) Act by requiring filers to submit certain documents analyzing a deal or affected markets even where the evaluation or analysis is limited to geographies or operations outside of the United States. This is a significant shift in the Agency’s interpretation of Items 4(c) and 4(d) of the HSR Notification and Report Form.

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Record-Breaking Fine for Gun-Jumping Imposed by the French Competition Authority

On 8 November 2016 the French Competition Authority (“FCA”) imposed the highest “gun-jumping” national and worldwide fine ever, €80 million, on Altice-Numericable, a major French telecommunications operator, in relation to its 2014 acquisitions of SFR (“Société Française du Radiotéléphone”) and OTL (“Omer Telecom Limited”). Image of French flag overshadowing Western Europe.

On November 8, 2016, the French Competition Authority (“FCA”) imposed the highest “gun-jumping” national and worldwide fine ever, €80 million, on Altice-Numericable, a major French telecommunications operator, in relation to its 2014 acquisitions of SFR (“Société Française du Radiotéléphone”) and OTL (“Omer Telecom Limited”).

This is a world first decision when considering the amount of the sanction and the seriousness of the circumstances,” commented Isabelle de Silva, the President of the FCA since last October.

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DOJ Attorney Outlines Considerations in Evaluating Vertical Mergers

DOJ Attorney Outlines Considerations in Evaluating Vertical Mergers Wordcloud Illustration of Merger Acquisition

On November 17, 2016, Jon Sallet, DOJ’s Deputy Assistant Attorney General for litigation, presented a speech at the American Bar Association Antitrust Section’s Fall Forum in which he outlined his views regarding the DOJ’s approach to vertical mergers and other transactions that raise the potential for vertical restraints on competition.  After recapping some of the history regarding the DOJ’s treatment of vertical restraints, Mr. Sallet commented on issues such as merger-related efficiencies, competitive effects, input foreclosure and raising rivals costs, innovation effects, the exchange of competitively sensitive information that could harm interbrand competition, and potential anticompetitive effects in transactions that do not involve a combination of vertically related assets.  Finally, he noted that if the DOJ has concerns regarding anticompetitive effects, it might feel that conduct remedies are insufficient and may require structural remedies or even try to block the transaction.  Any company considering a vertical merger or a transaction that may raise the potential for vertical restraints on competition will benefit from reviewing Mr. Sallet’s speech.  The speech is available here.

 

China’s and Japan’s Antitrust Enforcement Agencies Warm Up To Each Other

Chinese and Japanese crossed flags increased communication, cooperation and coordination among Chinese and Japanese antitrust enforcement agencies

Although China and Japan have very different histories regarding their antitrust laws, antitrust enforcement officials from the two countries have recently taken steps to open a formal dialogue. This is a welcome development for Chinese and Japanese companies, as well as for foreign companies that do business in China and Japan, and it continues the trend of increased communication, cooperation and coordination among national enforcement agencies. There remains an open question, however, as to how convergence among Asian antitrust enforcement agencies will affect possible convergence with agencies in the United States, the European Union and the rest of the world.

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Fnac-Darty: A Landmark Merger Decision in France

On 18 July 2016, the French Competition Authority (“FCA”) broke new ground in France by holding that retail distribution of electronic products through both physical stores and online channels is a single relevant market.

The background and the FCA’s Decision

The FCA’s decision concerns Fnac’s acquisition of Darty. The proposed transaction drew a great deal of public attention because it involves France’s two largest click and mortar retailers. It drew even more attention in March 2016, when the FCA announced a phase II examination of the potentially negative effects of the merger. However, in its 18 July 2016 decision, the FCA reversed course and granted conditional approval for the transaction after determining the relevant market includes both online and physical distribution channels.

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ValueAct Settlement Marks Record Penalty in Heightened Agency Efforts Against HSR Act Violations

Where is the line drawn between acquisitions of securities made “solely for the purpose of investment” on one hand, and influencing control, thereby requiring regulatory approval, on the other hand? That is the central cautionary question that was reinforced by the July 12, 2016, Department of Justice (“DOJ”) settlement with ValueAct Capital.  The well-known activist investment firm agreed to pay $11 million to settle a suit alleging that it violated the premerger reporting and waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”).  ValueAct purchased more than $2.5 billion of shares in two oil companies, Baker Hughes Inc. and Halliburton Co., after they announced they would merge.  The DOJ alleged that ValueAct used its ownership position to influence the proposed merger and other aspects of Baker Hughes and Halliburton, and thus could not rely on the exemption.

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China’s Fair Competition Review System: China Takes Another Significant Step Eight Years After Enacting the Anti-Monopoly Law

Rshutterstock_99699011-2ecognizing concern that the Chinese government intervenes excessively into markets and private economic activities, the China State Council recently released opinions directing the implementation of a fair competition review system (“FCRS”), which is intended to moderate administrative authorities’ issuance of regulations and minimize the government’s interference in China’s economy. Although the CRS has been hailed as “a key step to establish the fundamental status of competition policies,”[1] its success will depend on how it is implemented.

On June 1, 2016, the Opinions of the State Council on Establishing a Fair Competition Review System During the Development of Market-Oriented Systems (“Opinions”) were promulgated and became effective.  The Opinions note that enforcement of current laws sometimes entails “local protectionism, regional blockade, industry barriers, business monopoly, granting preferential policies in violation of the law or illegally prejudicing the interests of market players, and other phenomena contrary to the efforts of building a unified national market and promoting fair competition.”  These so-called “administrative monopolies,” which often are at issue in cases investigated under the Anti-Monopoly Law (“AML”), are at cross purposes to the AML.  In an effort to reduce or eliminate obstacles to economic development, the Opinions call for limiting the government authorities’ administrative powers, establishing the FCRS, preventing new policies and measures that exclude competition, and gradually revising and ultimately abolishing existing provisions that impede fair competition.

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FTC Provides New Guidance on Classifying Foreign Entities Under the HSR Pre-Merger Notification Program

On May 19, 2016, the Federal Trade Commission (“FTC)” issued an important clarification regarding how the agency will determine whether a foreign entity is classified as corporate or non-corporate for the purpose of the agency’s premerger notification program.[1]  Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976[2] (also referred to as the “HSR Act”), parties to certain mergers or acquisitions must notify both the Federal Trade Commission and the U.S. Department of Justice prior to consummating the transaction.  Under this program, whether a party to the transaction is a corporate or non-corporate entity (e.g., an LLC, partnership) can have significant implications for determining whether a filing is required and whether an exemption might apply.[3]  While evaluating party status has historically been straightforward for U.S. entities, foreign entities pose a number of challenges.

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Four Takeaways From the Court’s Decision Blocking the Office Depot-Staples Merger

On May 17, 2016, Judge Emmet G. Sullivan (D.D.C.) issued a memorandum opinion explaining his decision to enjoin the Office Depot/Staples merger under Section 13(b) of the FTC Act.  The court conducted a two-week trial in which the FTC called ten witnesses and 4000 exhibits were admitted into evidence, after which defendants opted to rest.  The court found that the FTC “established their prima facie case by demonstrating that Defendants’ proposed merger is likely to reduce competition in the Business to Business (“B-to-B”) contract space for office supplies.”  Defendants largely relied on Amazon’s development of on-line B-to-B services to replace or restore any reduction in competition resulting from the merger, but the court found that argument unpersuasive and enjoined the merger.

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