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ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
Mergers & Acquisitions
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THE LATEST: Learnings from Merger Remedies Study Underscores FTC’s Heightened Focus on Remedy Packages and Proposed Buyers

by and | Feb 22, 2017 | ,

WHAT HAPPENED:
  • In early February, the FTC released its Merger Remedies Study (the Study), which focused on transactions from 2006-2012 in which the FTC found a competitive problem that did not require a block outright, and allowed the transaction to gain clearance so long as the merging parties agreed to what the FTC determined were appropriate remedies to restore competition to the impacted market.
  • Via case study method, questionnaires and data, the FTC analyzed the outcomes of 89 remedial orders and self-critiqued its success in restoring competition and used the learnings to refine its internal best practices.
  • The report serves as an update to practitioners for understanding what is required to develop an effective remedy package, what qualities the FTC seeks in a buyer of the remedy package and how the FTC will seek to implement the remedy.
WHAT THIS MEANS:
  • On balance, the Study supported the FTC’s current practices.
  • Remedy packages consisting of an ongoing business were all successful—which confirms FTC’s long-held conviction that these kinds of divestitures are highly likely to succeed in restoring competition.
  • There will be heightened focus when the remedy package consists of selected assets (that is, not an ongoing business) and a heightened focus on the financing/funding of the divestiture buyer.
  • In these situations, merging parties should expect a fact intensive inquiry by the FTC, the potential for the FTC to seek larger asset packages that include products outside of the competitive problem area (if needed to make the proposed buyer competitive) and increased information sharing with the proposed buyer (and future competitor) to transition the business.
  • FTC has a strong preference for proposed buyers with experience and strong financial commitment to the business. These kinds of proposed buyers are more effective at securing the right personnel, understanding what’s needed to effectively compete (e.g., assets, supply agreements, production processes) and implementing the transition.


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The LATEST: FTC “Second Requests” to be Narrower in Scope under Ohlhausen’s Leadership

by , and | Feb 17, 2017 | ,

Transactions that meet the Hart-Scott-Rodino thresholds for notification must be reported to the Federal Trade Commission (“FTC”) and Department of Justice. Where a notified transaction raises competition concerns, the reviewing agency may decide to launch an in-depth investigation and request additional information from the merging parties, known as a “Second Request,” which can take several months and cost companies millions of dollars to fully respond. Under FTC Acting Chairwoman Maureen Ohlhausen’s leadership, however, the burden of a Second Request may decrease, as she intends to narrow their scope.

WHAT HAPPENED:
  • Acting Chairwoman Ohlhausen has signaled that Second Requests will be more limited under her leadership, based on comments made on February 15, 2017 at a Washington conference.
  • The standard for initiating a Second Request will not change. However, once initiated, Second Requests will be narrower in scope, in terms of markets assessed and data requested from companies.
WHAT THIS MEANS:
  • The standard used by the FTC to initiate such investigations will not change; thus, complex transactions raising competition concerns will likely still face a Second Request.
  • However, the time and cost associated with complying with a Second Request may be reduced, which will be good news for companies who may face a shorter review at a lower cost.
  • This business-friendly approach is consistent with Commissioner Ohlhausen’s guiding principles of “regulatory humility, […] the power of competitive markets, and a devotion to empiricism” and her objective to “minimiz[e] the burdens on legitimate businesses”. As such, it may be one of further changes to come in FTC enforcement.

The FTC’s Path Ahead.

Statement of Acting FTC Chairman Ohlhausen on Appointment by President Trump.



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McDermott EU Competition Annual Review 2016

by | Feb 2, 2017 | , , , , , ,

It is difficult for General Counsel and their teams to monitor all new developments adequately. With the growth of the Internet and the daily updates to EU competition rules, everyone receives and has access to masses of information, but it is difficult to select that which is really relevant to one’s business.

McDermott’s EU Competition team across Brussels, France, Germany and Italy has authored the EU Competition Annual Review 2016 to help General Counsel and their teams to focus on the essential updates that they should be aware of.

This Special Report summarizes recent developments in EU competition rules during the year 2016 where several new regulations, notices and guidelines were issued by the European Commission and many interesting cases were decided by the General Court and the EU Court of Justice.

All these new rules and judicial decisions can be relevant for international companies operating in the EU. Indeed, in addition to the daily update, this booklet provides an overview of the main recent developments in EU competition rules and can be kept as a ready reference when dealing with complex issues of EU competition law.

Read the full report.



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Flurry of Antitrust Merger Enforcement Actions as Obama Presidency Comes to a Close

by | Feb 2, 2017 | , ,

The Federal Trade Commission (FTC) and Antitrust Division of the Department of Justice (DOJ) announced several antitrust enforcement actions in advance of the inauguration of President Trump, including settlements for failures to file under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), a challenge to an unreportable deal and a settlement of a “gun-jumping” claim under the HSR Act. These cases illustrate the importance of compliance with the often complex reporting, waiting period and substantive aspects of antitrust laws in connection with acquisitions of various types, whether or not those acquisitions require premerger reporting. Failure to comply can result in significant financial penalties.

Two HSR “Failure to File” Settlements. On January 17, 2017, the FTC announced two settlements for failures to submit HSR filings and observe the statutory waiting period under the HSR Act prior to consummating acquisitions that met the relevant thresholds. The HSR Act requires notification of certain acquisitions of voting securities, assets and non-corporate interests if the value held as result of the transaction is in excess of certain notification thresholds and size of person thresholds (if applicable), and the transaction is not otherwise exempt. Parties to reportable transactions must observe the statutory waiting period prior to closing. If they fail to file, or otherwise do not observe the waiting period under the HSR Act, the parties may be liable for civil penalties of up to $40,654 per day (which was recently increased from $40,000, effective February 24, 2017).

In the first settlement, Ahmet Okumus agreed to pay $180,000 in connection with failing to notify for his purchases of voting securities of Web.com Group, Inc. (Web.com). According to the complaint, in September 2014, Okumus acquired voting securities of Web.com and as a result, held approximately 13.5 percent of the voting securities of Web.com. Okumus continued to acquire voting securities of Web.com through November 2014. Okumus did not file an HSR notification prior to making these acquisitions, relying on the “investment only” exemption, which exempts acquisitions resulting in holdings of 10 percent or less of the issued and outstanding voting securities if the shares are held solely for the purpose of investment (see 15 U.S.C. § 18a(c)(9) and 16 C.F.R. § 802.9). However, because Okumus held in excess of 10 percent, this exemption was not applicable. In late November of 2014, Okumus made a corrective filing that allowed him to acquire additional Web.com voting securities for approximately five years, provided that the value of the voting securities he held as a result of any acquisition did not exceed the $100 million (as adjusted) notification threshold. In a letter that accompanied his corrective filing, he indicated that the failure to file was inadvertent. The FTC did not seek civil penalties in that instance.

In June of 2016, Okumus began acquiring additional voting securities of Web.com. Later that month he acquired 236,589 voting securities of Web.com, and as a result of that acquisition, Okumus held voting securities valued (per the HSR rules) in excess of the $100 million (as [...]

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Antitrust M&A Snapshot: October – December 2016 Update

by , and | Jan 30, 2017 | , , , , ,

McDermott’s Antitrust M&A Snapshot is a resource for in-house counsel and others who deal with antitrust M&A issues but are not faced with these issues on a daily basis. In each quarterly issue, we will provide concise summaries of Federal Trade Commission (FTC), Department of Justice (DOJ) and European Commission (EC) news and events related to M&A, including significant ongoing investigations, trials and consent orders, as well as analysis on the trends we see developing in the antitrust review process.

Read the full report here.

 



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Musical Chairs at the FTC—Ohlhausen is New Acting Chairwoman

by | Jan 27, 2017 | ,

This month has seen significant changes in the landscape of federal leadership and the changes have now reached the Federal Trade Commission (FTC). On January 13, current Chair Edith Ramirez announced that she would resign from her position effective February 10, 2017. This Wednesday, January 25, the new administration designated Maureen Ohlhausen as Acting Chair. Ohlhausen, a Republican, was one of two remaining commissioners at the agency, along with Democrat Terrell McSweeny.

Ramirez served as a commissioner since 2010 and chair since early 2013 by designation of fellow Harvard Law Review member, President Obama. She spent her early career as a litigator with Quinn Emanuel and focused on antitrust, unfair competition and Lanham Act work. From the beginning of her tenure as chair, Ramirez developed a reputation as a hard-working and effective leader who was experienced, even-handed and not afraid to bring mergers to court. As a Latina and the daughter of Mexican immigrants, Ramirez was the first member of an ethnic minority to oversee the agency. During her tenure, she also secured a number of high-profile wins for the commission.

Ohlhausen has been a commissioner since 2012, though she started at the FTC’s General Counsel’s Office back in 1997. She has also worked as an advisor to former FTC Commissioner Orson Swindle and has been Deputy Director and then Director of the Office of Policy Planning. Ohlhausen stated at a Heritage Foundation antitrust conference this month that “all signs point to a new antitrust policy.” She discussed narrowing the scope of “Second Requests” in merger reviews by making them more targeted and therefore less burdensome. She also expressed a priority of greater protection for intellectual property rights, complaining that the agency has been too quick to accuse standard essential patent (SEP) holders of anticompetitive behavior when suing to defend their rights.

Meanwhile, the new administration’s position on merger activity hasn’t been clear. While in October 2016, Donald Trump described the AT&T-Time Warner deal as “a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few,” and said that Comcast’s acquisition of NBC Universal “concentrates far too much power in one massive entity that is trying to tell the voters what to think and what to do,” he has subsequently chosen advisers on telecom and antitrust issues who appear to apply traditional antitrust analysis that is more merger-friendly than the prior administration.

Republican and Former Commissioner Joshua Wright leads the new administration’s transition of the FTC. The incoming administration will need to find three new commissioners for the five-member panel. At least one of the three must be a Democrat. The new appointments will be very important to follow for clients considering mergers in the near future.



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Notification Threshold Under the Hart-Scott-Rodino Act Increased to $80.8 Million

by | Jan 26, 2017 | ,

Pursuant to the amendments passed by the US Congress in 2000, the FTC announced revised thresholds for HSR pre-merger notifications on January 19, 2017. These increased thresholds will become effective 30 days following publication in the Federal Register. These new thresholds apply to any transaction completed and any HSR pre-merger notifications filed on or after the effective date, expected in late February.

Read the full article here.



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Changes to Polish Antimonopoly Law in a Nutshell

by | Jan 19, 2017 | , , ,

The Polish Office of Competition and Consumer Protection (Urząd Ochrony Konkurencji i Konsumentów, “UOKiK”) has recently published its 2015 annual report presenting its first experiences with the recent amendments to Polish merger control regulations. However, only future developments will show the effects of the new much more severe rules on cartel infringement proceedings and sanctions for cartel behaviour.

On 18 January 2015 far-reaching changes to the Polish Act on Competition and Consumer Protection (Ustawa o ochronie konkurencji i konsumentów), alternatively named “Antimonopoly Law” (prawo antymonopolowe), came into effect. These have been made to close previously identified gaps and strengthen competition and consumer protection. In addition to important changes with respect to merger control and anticompetitive practices, the Antimonopoly Law as amended has introduced changes that allow for more open dialogue between undertakings and the UOKiK.

Faster and more flexible merger control proceedings

According to UOKiK’s 2015 annual report the average duration of merger control proceedings could be reduced by half despite the fact that the overall number of merger control proceedings increased. The average duration dropped from 57 days in 2014 to 34 days in 2015. Of all merger control proceedings that UOKiK completed in 2015 only three (of 235) were Phase 2 proceedings. This can be explained by the following amendments introduced in early 2015:

  • A new two-stage merger control process: Phase 1 (1 month) and Phase 2 (4 months). The waiting period may be extended by UOKiK in the event that UOKiK requires additional information and documents from the parties;
  • New approach in case of competition concerns: UOKiK informs undertakings about its competition concerns so that they may alter the proposed concentration to alleviate UOKiK’s concerns, e.g. through adequate remedies;
  • Approach towards remedies: Undertakings may request UOKiK that it refrains from publishing in its decisions the deadline by which divestments must be made;
  • De minimis clause extended: mergers and the creation of joint ventures explicitly (just like acquisitions of control already under the old law) do not need to be notified to the UOKiK if the turnover in Poland of each of the parties to the transaction does not exceed the equivalent of EUR 10 million in each of the two financial years preceding the transaction. The de minimis clause also applies to concentrations whereby control and assets are being acquired simultaneously.

Effective fight against cartels

New rules for more effective fights against cartels have been introduced but could not yet show any significant effect in 2015. The number of started proceedings (from 87 in 2013 down to 34 in 2015) and of leniency applications (from 10 in 2014 down to 2 in 2015) has dropped. UOKIK explains the reduction in numbers with the application of its new “soft approach” that contains inter alia best practices and the authority’s possibility to request undertakings to voluntarily terminate an infringement and to apply its best practices.

Nonetheless, one should keep in mind the following amendments to the law:

  • New provisions concerning fines on individuals: individuals can now [...]

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