ANTITRUST ALERT
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
Committee on Foreign Investment in the United States
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Heard at the 2023 Spring Meeting: Part 2

by , , , , , , , and | Apr 5, 2023 | , , , , ,

The American Bar Association’s Antitrust Law Section held its annual Spring Meeting in Washington, DC, on March 29–31, 2023. The Spring Meeting sessions featured updates from federal, state, and international antitrust enforcers and thought-invoking discussions on leading antitrust issues facing the business community today. Following Part 1, this post summarizes key takeaways from the second portion of the Spring Meeting, including updates regarding premerger notification filings, labor markets, state antitrust enforcement, compliance programs, national security, consumer protection, interlocking directorates, and remedies.

FTC Zeros in on Missing Material in HSR Filings

  • Federal Trade Commission (FTC) Bureau of Competition Director Holly Vedova underscored the consequences of failing to submit Item 4 material in HSR filings. She noted the FTC will bounce filings found to have missing Item 4 documents. If the waiting period has not expired and newly surfaced documents change the scope of the request, the FTC may issue a Second Request. If the waiting period has expired when consequential missing material is realized, the FTC will require a corrective filing for the original transaction and may impose “significant” civil penalties.
  • Vedova also reminded practitioners that changes in a merger agreement can require an additional HSR filing. If material changes are made before the waiting period expires, parties should proactively reach out to the FTC to inquire as to whether further action is needed. Parties may need to amend their original filing or submit a new one entirely.

Labor Markets Remain High Priority

  • The antitrust enforcement agencies have promised continued, fervent action in labor markets. In keeping with this promise, this January, the FTC issued a proposed rule that would make it illegal to enter into or maintain noncompete agreements with employees or independent contractors.
    • FTC Chair Lina Khan emphasized that noncompetes impede business dynamism, innovation, and entry, and eliminating noncompetes is estimated to return $300 billion back into the pockets of American workers.
    • FTC Commissioner Rebecca Kelly Slaughter pointed to California as an innovator in labor market enforcement, citing its prohibition on noncompetes. FTC enforcers encouraged the continued submission of public comments on the proposed rule. The comment period is set to close on April 19, 2023.
    • Wisconsin Assistant Attorney General Gwendolyn Cooley also noted that enforcing noncompetes has been a hallmark of state enforcement, especially in New York and Washington, and additional states are considering legislation that would ban noncompetes.
  • The Department of Justice (DOJ) Antitrust Division’s Acting Director of Criminal Enforcement Emma Burnham and the Chief of DOJ’s Criminal II Section James Fredericks noted practitioners should expect an uptick in criminal cases in the labor and employment space. DOJ Antitrust Division’s Deputy Assistant Attorney General Jonathan Kanter stressed that antitrust crimes focused on workers are just as important as those focused on consumers.
  • New York’s antitrust chief, Elinor Hoffman, indicated that New York is focused on labor issues, including no-poach agreements and noncompete clauses that may arise during merger reviews. [...]

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THE LATEST: Further Efforts to Broaden the Scope and Impact for CFIUS Reviews of Foreign Acquisitions of US Businesses

by and | Mar 17, 2017 | ,

We reported earlier on the Committee on Foreign Investment in the United States (CFIUS) and its legal and practical authority to review M&A transactions for possible risks to US national security posed by foreign ownership of a US business. Sens. Cornyn (R-TX) and Schumer (D-NY) reportedly are working separately on legislation to strengthen CFIUS, which could directly affect some cross-border M&A. Sen. Cornyn’s proposed changes to CFIUS would target Chinese technology investments while Sen. Schumer’s bill would encourage CFIUS to look at economic implications as part of its review.  These legislative efforts follow a bipartisan Congressional request in late Fall 2016 for the Government Accountability Office (GAO) to update its periodic analysis of CFIUS, urging the GAO to evaluate the possible expansion of factors considered by CFIUS in its M&A reviews to cover investment reciprocity and net economic benefits.

WHAT HAPPENED:
  • Now Sen. Debbie Stabenow (D-MI) and Sen. Chuck Grassley (R-IA) have introduced legislation that would add the Secretary of Agriculture and the Secretary of Health and Human Services as voting members of CFIUS. The bill would also direct CFIUS to consider matters of food security, access and safety when it reviews overseas acquisitions of US firms.
  • Though CFIUS may already consider food security as an element of national security, the new proposal would at a minimum enhance this factor. Stabenow said in a statement introducing the bill, “As foreign entities continue their aggressive acquisitions of US food and agriculture companies, it’s imperative that these transactions face additional scrutiny.”
WHAT THIS MEANS:
  • More broadly, the bipartisan legislative activity suggests an increased likelihood that CFIUS reform will gain traction in the Congress. Further support for broadening the scope and force of CFIUS may come from the Trump Administration, which would be consistent with its “America first” trade policy.
  • Any businesses with planned or pending cross-border M&A activity in the US, including those in the agribusiness sector, should monitor these developments.


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THE LATEST: National Security Reviews of Foreign Ownership May Broaden

by and | Feb 23, 2017 |

The Committee on Foreign Investment in the United States (CFIUS, commonly pronounced “syphius”) reviews M&A transactions that may pose a risk to national security through foreign control of a US business.  (See our recent article).  CFIUS is composed of members from the Departments of Treasury (chair), Homeland Security, State, Defense and other agencies.  It has the power to recommend to the President that a transaction be stopped, and is well known for its reviews of the Dubai Ports World and IBM/Lenovo deals, both of which it approved (though the former was terminated because of strong political opposition).  By law, its process is fairly secretive, although it holds itself to tight deadlines for issuing final recommendations.

WHAT HAPPENED:
  • As reported February 21, Senators Cornyn (R-TX) and Schumer (D-NY) are separately working on legislation that would strengthen CFIUS’ hand in reviewing proposed acquisitions.
  • In the face of skyrocketing investment by Chinese companies in US firms, Senator Cornyn’s bill would require CFIUS to look harder at proposed Chinese acquisitions of US technology companies.
  • Reportedly, Senator Schumer’s bill would take a different tack, requiring CFIUS to consider economic implications in addition to national security concerns as part of its review. Currently CFIUS’ mandate is restricted to considering national security issues that may include national defense, technological leadership, critical infrastructure, foreign government influence and export controls compliance.
WHAT THIS MEANS:
  • Companies considering sensitive cross-border transactions involving US business should watch any proposed legislation closely.
  • The Trump Administration has not yet addressed these specific legislative ideas, but President Trump may be likely to support legislation that furthers his “Buy American, Hire American” theme.
  • Currently CFIUS can initiate review of a deal either by voluntary disclosure from the parties or on its own initiative, even post-closing. Thus, any legislation that broadens CFIUS’ mandate or that alters the voluntary nature of self-notifying, could add a significant regulatory burden to cross-border transactions.
  • CFIUS’ current investigative timeline of 30 days (initial review) plus 45 days (investigation if concerns exist) looks unlikely to change and will continue to provide some regulatory certainty for parties.


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