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Antitrust M&A Snapshot | DOJ Arbitrates Market Definition Dispute While EC Clears Acquisition of Broadband and Energy Networks

by Matt Evola and Max Küttner | Nov 27, 2019 | DOJ Developments, EC Developments, EU Developments, FTC Developments, Mergers & Acquisitions

There was significant antitrust activity in the third quarter of 2019. In the United States, the Federal Trade Commission (FTC) and Department of Justice (DOJ) continued an active docket challenging M&A transactions. DOJ is resolving antitrust reviews significantly faster than the FTC, following DOJ’s 2018 policy establishing a six-month target. The DOJ also made use, for the first time, of its authority to arbitrate a market definition dispute, potentially opening the door for a new tool the DOJ could employ to resolve challenges more rapidly.

In the European Union, the European Commission (EC) agreed to clear, subject to conditions, the acquisition of broadband and energy networks following lengthy Phase 2 investigations. Meanwhile, the national European regulators opened new in-depth investigations into commercial radio advertising, software as a service for airlines, autonomous sea surface vehicles and the promotion of live music events (all in the UK) and prohibited the merger of two recyclers (Germany).

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6 Trends in Global Antitrust M&A, and How General Counsel Can Deal with Them

by Jon B. Dubrow and Joel R. Grosberg | Oct 16, 2019 | Chinese Developments, DOJ Developments, EC Developments, FTC Developments, German Developments, Mergers & Acquisitions

Today, companies looking to merge with others across jurisdictions would do well to consider antitrust issues at the beginning of the transaction process; regulatory antitrust challenges to M&A are increasing globally. On Corporate Counsel, McDermott partners Jon B. Dubrow and Joel R. Grosberg discuss six risks to deals from antitrust regulators, such as vertical merger enforcement changes at the US DOJ, and ways to manage them.

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FTC Ratchets up Scrutiny on Pharmaceutical Deals

by Jonathan Ende and Will Diaz | Oct 15, 2019 | FTC Developments, Healthcare Antitrust

WHAT HAPPENED:

Recent developments indicate that pharmaceutical deals are attracting greater scrutiny from the Federal Trade Commission (FTC).
In September 2019, FTC Chairman Joseph Simons reportedly stated that the FTC will more closely scrutinize deals with overlaps involving products that are still in clinical study or development. Because of the high failure rate of products in early phases of study, the FTC typically has focused on overlaps between marketed products or products near Federal Drug Administration (FDA) approval, g., products in Phase III of the FDA pipeline. Chairman Simons’s statement makes clear that the FTC plans to examine earlier stage products while reviewing deals.
In 2018, the director of the FTC’s Bureau of Competition announced in a speech that the FTC would favor divestitures of marketed drugs over pipeline drugs in pharmaceutical deals. Traditionally, when the FTC has had a concern about overlapping products, it has allowed the merging parties to decide which of the overlapping products to divest to remedy the concern. The director explained that, unlike marketed products, pipeline products may be costly to transfer or never be brought to market, eliminating a potential source of future competition.
Legislators on Capitol Hill have placed pressure on the FTC to scrutinize pharmaceutical deals with more vigor. Nine US senators wrote the FTC in September to voice concerns about the effect of pharmaceutical deals on innovation and prices. In their letter, the senators specifically highlighted divestitures of pipeline products, stating that such divestitures may not sufficiently address threats to competition because pipeline products may never make it to market.

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FTC Settlement Agreement Demonstrates Commissioners’ Competing Views on Merger Non-Competes

by Gregory E. Heltzer and Joshua W. Eastby | Oct 4, 2019 | Energy/Commodities, FTC Developments, Mergers & Acquisitions

What Happened

DTE and Enbridge’s natural gas pipeline joint venture, Nexus, agreed to purchase the Generation Pipeline (Generation).
Generation was owned by a group of sellers including North Coast Gas Transmission (North Coast).
Generation’s primary asset is a 23-mile pipeline that serves the Toledo, Ohio, area.
North Coast continues to own a competing pipeline near Toledo, Ohio.
The purchase agreement contained a non-compete provision that prevented the sellers, including North Coast, from competing in three counties surrounding Toledo, Ohio, for three years.
After an investigation, the FTC announced a settlement with DTE, Enbridge and Nexus to remedy the FTC’s concern with the non-compete provision by requiring the purchase agreement to be amended to remove the non-compete provision.
The FTC Commissioners were unanimous in their conclusion that the challenged non-compete was unlawfully broad, though several Commissioners issued concurring statements regarding the import of the FTC’s action in this case.

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Antitrust M&A Snapshot | US Agencies Aggressive While the EC Publishes Report on Competition Policy for the Digital Era

by Joshua W. Eastby | Aug 28, 2019 | DOJ Developments, EC Developments, EU Developments, FTC Developments, Mergers & Acquisitions

The second quarter of 2019 proved to be a busy season for antitrust matters. In the United States, agencies continued to be aggressive and blocked transactions or required significant remedies. They cleared three mergers where divestitures were required; and in the face of FTC or DOJ opposition, companies abandoned several transactions, including between Republic National Distribution Company and Breakthru Beverage Group. Regarding vertical transactions, we continued to see a split between the FTC Republican and Democratic Commissioners regarding whether enforcement is required and the appropriate remedies.

In the European Union, the EC published a report on competition policy for the digital era, which deals with, among other things, acquisitions of nascent competitors. The EC also closed two merger control proceedings subject to divestitures, blocked a proposed joint venture, and showed that it will seek large fines for companies violating EU competition rules for merger notifications.

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The Latest: Changes Coming to Revenue Reporting for HSR Filings

by Jonathan Ende | Jun 28, 2019 | DOJ Developments, FTC Developments, Mergers & Acquisitions

What Happened:

The Federal Trade Commission (FTC), along with the Antitrust Division of the Department of Justice (DOJ), approved amendments to the Hart-Scott-Rodino (HSR) Rules and the instructions for completing the HSR Form.
After the amendments take effect on September 25, 2019, HSR filers will be required to use new 10-digit North American Product Classification System (NAPCS) codes in place of the current 10-digit North American Industry Classification System (NAICS) codes when reporting revenues in the HSR Form. The Form will continue to use 6-digit NAICS codes, but will switch from the 2012 codes to the latest version, released in 2017 by the Census Bureau.
Data on non-manufacturing revenue will be required to be reported using the updated 6-digit NAICS codes, while data on manufacturing revenue will be required to be reported using both the 6-digit NAICS industry code and the 10-digit NAPCS product codes.
The FTC intends to update the instructions for the HSR Form to reflect the changes made to the revenue reporting requirements.

What this Means:

Companies expecting to file an HSR after September 25 will need to familiarize themselves with the new 10-digit NAPCS codes and the updated 6-digit 2017 NAICS codes, and may want to update their databases to be in a position to file promptly when the new codes take effect on September 25.

Antitrust Enforcement Update: Spotlight on Physician Transactions

by Ashley Fischer, Katharine M. O'Connor, Lisa A. Peterson, Stephen Wu and McDermott Will & Emery | Jun 21, 2019 | FTC Developments, Healthcare Antitrust

At both the state and federal level, antitrust enforcement agencies continue to pursue successful challenges to physician practice transactions. This article summarizes two recent enforcement actions, as well as a new state law that requires prior notice of healthcare provider transactions. We also offer practical takeaways for providers pursuing practice acquisitions.

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Texas Court Declares Licensing Offer Based on End Device Is FRAND, Diverges from California Court in Qualcomm

by Anthony S. Ferrara, Lisa A. Peterson and McDermott Will & Emery | Jun 3, 2019 | IP Antitrust, Private Litigation

Standard-essential patent holders and implementers may face uncertainty regarding licensing practices following a May 23 Texas court ruling. In the ruling, a Texas federal judge reached a conclusion different from a recent California court decision—FTC v. Qualcomm—on the question of whether an SEP holder must base its royalty rates on the “smallest salable patent-practicing unit” in order to comply with a fair, reasonable and non-discriminatory royalty commitment.

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Federal Judge Finds Qualcomm Violated the FTC Act Through Monopolistic and Exclusionary Conduct

by Lisa A. Peterson, Anthony S. Ferrara and McDermott Will & Emery | May 23, 2019 | FTC Developments, IP Antitrust, Monopolization/Abuse of Dominance

On May 21, a California federal judge ruled in favor of the Federal Trade Commission (FTC) in its suit against Qualcomm in a much-anticipated decision, concluding that Qualcomm violated the FTC Act by maintaining its monopoly position as a modem chip supplier through a number of exclusionary practices, including refusing to license standard essential patents (SEPs) on fair, reasonable and non-discriminatory (FRAND) terms. Qualcomm likely will appeal the decision to the US Court of Appeals for the Ninth Circuit, but in the meantime, the court’s sweeping decision is likely to affect the course of dealing between SEP-holders and licensees. The decision is likely to substantially affect the ways in which SEP-holders take their technology and associated components that they manufacture to market.

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Antitrust M&A Snapshot | US Tackles Vertical Merger Enforcement Guidelines while the EC Blocks 2 Transactions

by McDermott Will & Emery, Anthony S. Ferrara, Jon B. Dubrow and Joel R. Grosberg | May 15, 2019 | DOJ Developments, EC Developments, EU Developments, FTC Developments, Mergers & Acquisitions

The first quarter of 2019 proved to be as active as ever for antitrust regulators in both the United States and Europe. In the United States, vertical merger enforcement was the focus of a few high-profile matters. The US DOJ has been working on an update to the Non-Horizontal Merger Guidelines, possibly providing clarification for merging parties.

Meanwhile in Europe, although the European Commission cleared a number of merger control proceedings with remedies, the European Commission also blocked two transactions during the first quarter of 2019.

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Hélène de Cazotte, a trainee in the Firm’s Brussels office, also contributed to this publication.