Merger Controls First Edition - J Sagar Associates

White & Case LLP USA
http://www.justice.gov/atr/cases/f270900/270983.pdf;
• the FTC recently sued to block the $29 million purchase of a company that produces education marketing databases.
In the Matter of The Dunn & Bradstreet Corp., FTC Docket No. 9342 (May 7, 2010), available at
http://www.ftc.gov/os/adjpro/d9342/100507dunbradstreetcmpt.pdf; and
• the DOJ (and certain State Attorneys General) challenged and required divestitures in a $5 million consummated
merger involving voting equipment. United States v. Election Sys. And Software, Inc., No. 1:10-cv-00380 (D.D.C.
Mar. 8, 2010) available at http://www.justice.gov/atr/cases/ess.htm.
The DOJ and FTC in the first two years of the Obama Administration have challenged more non-reportable mergers than
during the first seven years of the Bush Administration. These challenges involved a wide range of industries, including
dairy processing, chemicals, pharmaceuticals, medical products and devices, and educational marketing, in addition to
those noted above.
Depending on the circumstances, parties to smaller non-reportable transactions who want greater transparency into the
enforcement intentions of the agencies may elect to bring a proposed transaction to the attention of the agencies. Parties
considering such an approach, however, should be aware this strategy could present its own risks, including the possibility
of a lengthy investigation not governed by statutory deadlines during which the parties would not realise the benefits of
any contemplated synergies and efficiencies. Regardless whether the parties to a smaller non-reportable transaction
approach the agencies prior to consummating their transaction, the parties should assess the antitrust risks and costs
associated with defending any transaction raising substantive antitrust issues against a potential agency investigation and
litigation, including the possibility of “unscrambling the eggs” if the transaction has been consummated and the operations
of the parties have integrated.
Increased use of information gathered during merger investigations to open other investigations.
If a merger investigation progresses beyond the initial HSR waiting period, the parties are likely to receive a Second
Request. A Second Request generally requires the parties to produce significant volumes of business documents and other
information to facilitate an investigation of the transaction by the antitrust authorities. The HSR Act exempts most materials
obtained during merger review from disclosure under the Freedom of Information Act and generally prohibits their public
disclosure except “as may be relevant to any administrative or judicial action or proceeding”. 15 U.S.C. § 18a(h). Similarly,
information provided pursuant to a Civil Investigative Demand, while generally exempt from public disclosure, may be
shared by the DOJ with the FTC, and may be used for “official use in connection with court cases, grand juries, or a federal
administrative or regulatory proceeding in which the DOJ is involved”. DOJ Antitrust Division Manual (4th ed. 2008) at
III-66. Consequently, the agencies may refer information or documents to each other for ancillary investigations. For
example, the FTC may refer possible criminal violations of the antitrust laws, gleaned from business documents received
pursuant to a merger investigation, to the DOJ. In recent years, information gathered during merger investigations (and
other investigations) has been used to open civil and criminal investigations of other potential antitrust violations. Thus,
it is important that a company consider its potential exposure for previous antitrust violations when contemplating a merger
of its own or complaining about a proposed transaction to the agencies.
Increased use of behavioural and hybrid remedies.
In response to a number of recent vertical mergers seeking to take advantage of vertical synergies and efficiencies, the
DOJ and FTC have increasingly entered into consent decrees with merging parties that include “behavioural” or “conduct”
remedies, ranging from licensing provisions to reporting obligations. In mergers that raise both vertical and horizontal
concerns, the agencies have instituted hybrid remedies that include both behavioural remedies and traditional structural
remedies, such as divestiture. For example, in the Ticketmaster/Live Nation merger, combining the largest ticketing
company and a major promoter and venue owner, the hybrid remedy approved by the DOJ required the divestiture of
certain ticketing assets, an agreement by the parties to license ticketing software, and compliance with 10-year antiretaliation
provision prohibiting anticompetitive bundling. The use of these remedies is covered extensively under
“Approach to remedies” above, in the discussion of the DOJ’s Revised Remedies Guidelines.
Increasing international collaboration.
The burdens and complexities of multi-jurisdictional merger review and notification continue to create major concerns
and costs for companies around the world. Competition enforcement agencies worldwide are making efforts to address
these concerns. For example, the International Competition Network (“ICN”) is working to harmonise merger review
procedures and practices. The ICN’s purpose is to provide support for competition agencies in crafting enforcement
regimes and assisting with the development of strong competition cultures. See, e.g., Memorandum on the Establishment
and Operation of the International Competition Network, at 1, available at
http://www.internationalcompetitionnetwork.org/media/library/mou.pdf. The growth of the ICN and its efforts at
convergence in merger review continue to create opportunities for reducing the burden on parties faced with multijurisdictional
review of cross-border transactions. There is a risk, however, that with increased convergence, there are
more opportunities for competition agencies to review cross-border transactions, increasing the burden of multijurisdictional
review on the merging parties. See J. Mark Gidley & George L. Paul, Worldwide Merger Notification
Requirements (2008).
Global Legal Insights ­ Merger Control First Edition
—216—
© Published and reproduced with kind permission by Global Legal Group Ltd, London
www.globallegalinsights.com