Merger Controls First Edition - J Sagar Associates

White & Case LLP USA
applicable, how the industry has changed, etc. will often help frame the antitrust issues and focus the agency analysis,
which can both expedite the agency’s review of the transaction and help secure a favourable result.
Approach to remedies (i) to avoid second stage investigation and (ii) following second stage investigation
Upon receiving HSR filings from the parties to a merger, the agencies have an initial 30-day period in which to investigate
a proposed transaction. If, based on this initial investigation, the agency reviewing the transaction does not detect any
substantive antitrust issues with the proposed transaction, the agency will usually either grant early termination of the
waiting period or allow the waiting period to expire without taking any action (after which the parties may consummate
the transaction). If, however, the agency reviewing the proposed transaction has substantive antitrust concerns, or requires
additional information to conduct a more thorough investigation, the agency will usually issue a Second Request to the
parties. A Second Request is essentially a cumbersome subpoena requiring a review of potentially a large volume of
company documents, the drafting of responses to interrogatories, and often burdensome data requests.
Once both of the parties have substantially complied with their respective Second Requests, the agency reviewing the
transaction has 30 additional days (10 days in the case of a cash tender offer or bankruptcy matter), or longer if the parties
and the agency so agree (usually pursuant to a so-called “timing agreement”), to continue its investigation. Typically,
during the period that the parties are compiling information responsive to their Second Requests and subsequent waiting
period, the parties and the agency will discuss potential remedies to resolve the agency’s concerns. At the end of this
second waiting period, the agency may take no action, the parties and the agency may agree to resolve the agency’s
concerns on certain terms, or the agency may sue to try to block the transaction.
Parties are often under intense pressure to close a transaction as quickly as possible, for example, to preserve customers
and suppliers and stem key personnel departures. Parties have utilised a number approaches to try to resolve agency
antitrust concerns earlier rather than later, and prior to issuance of a Second Request, or before having to substantially
comply with a burdensome Second Request.
Strategies to Try to Resolve Agency Antitrust Concerns Early and Avoid a Second Request.
By involving antitrust counsel in deal planning, parties can develop various strategies to try to resolve likely agency antitrust
concerns early on in the merger review process, and potentially avoid issuance of a Second Request.
Voluntarily Approach Agency. Thirty days may not be enough time for the parties to get the agencies comfortable with a
proposed transaction, particularly complicated transactions. One approach that parties sometimes take is to voluntarily
approach the agencies in advance of making their HSR filings to try to educate the agency about the proposed transaction
and to try to focus the agency on key facts and circumstances that the parties believe should lead the agency not to oppose
the proposed transaction or to resolve any agency concerns on terms acceptable to the parties. Even if early engagement
with the agency does not resolve all potential antitrust concerns, early advocacy may significantly narrow the scope of a
Second Request.
Parties considering employing such a strategy, however, should first carefully consider the potential downsides to such a
strategy. There are no guarantees that early involvement of agency staff attorneys reviewing a transaction will result in
termination of the waiting period in the first 30 days. It may only give the agency more time to prepare to litigate to stop
a proposed transaction. Furthermore, such an approach could complicate business issues between the parties. For example,
if the parties have not yet signed a definitive merger agreement, agency resistance to a proposed transaction may lead to
a dispute between the parties on antitrust risk and other deal terms in the merger agreement.
Pull and Refile. After the parties have made their respective HSR filings and the initial statutory 30-day waiting period is
coming to an end, parties seeking to resolve agency concerns prior to the issuance of a Second Request may elect to “pull
and refile” their HSR filings. This re-starts the 30-day initial waiting period and delays the need for the agencies to issue
a Second Request. It is common for parties to pull and refile their HSR filing if they believe that they can resolve agency
concerns within the next 30 days. There is no fee to pull and refile once, although additional filing fees are incurred if
parties pull and refile two or more times.
Voluntary Resolution Prior to Issuance of a Second Request. Parties seeking fast resolution of agency concerns may elect
to voluntarily settle with the reviewing agency via a fix-it-first, consent decree, or other method discussed immediately
below.
Agency Remedies Guides. The DOJ and FTC have separately issued guides discussing the types of remedies that the
respective agencies will consider in resolving agency concerns with a proposed transaction.
DOJ Revised Remedies Guide. In June 2011, the DOJ released an updated version of its Policy Guide to Merger Remedies
(“2011 Remedies Guide”) to “reflect[] the changes in the merger landscape and the lessons the division has learned”.
DOJ, Antitrust Division Policy Guide to Merger Remedies (June 2011), available at
http://www.justice.gov/atr/public/guidelines/272350.pdf. This replaces the DOJ’s 2004 Remedies Guide (DOJ, Antitrust
Division Policy Guide to Merger Remedies (Oct. 2004), available at
http://www.justice.gov/atr/public/guidelines/205108.htm). The 2011 Remedies Guide provides parties contemplating a
merger with potential new opportunities and challenges. By officially accepting conduct remedies in certain circumstances,
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