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A Global Resource for Compliance Officers & Legal Advisors
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Heard at the 2023 Spring Meeting: Part 1

by , , , , , , , and | Apr 3, 2023 | , , , ,

The American Bar Association’s Antitrust Law Section recently held its annual Spring Meeting in Washington, DC, featuring updates from federal, state, and international antitrust enforcers and in-depth commentary on leading antitrust issues facing the business community today. This post recaps key takeaways from the first portion of the Spring Meeting.

CIVIL ENFORCEMENT AND MERGER REVIEW: US DEPARTMENT OF JUSTICE (DOJ) PRIORITIES

  • Aggressive Enforcement by Any Other Name: DOJ Antitrust Division Deputy Assistant Attorney General Hetal Doshi characterized DOJ’s enforcement posture as “not aggressive enforcement, just enforcement,” but nevertheless opined that the Department’s past practice of erring on the side of under-enforcement has “ill-served” the public.
  • Whole-of-Government Means Whole-of-Government: The Division’s Deputy Assistant Attorneys General Maggie Goodlander and Michael Kades highlighted that various federal statutes other than the antitrust laws confer the power to act to preserve competition. They emphasized DOJ’s intent to pursue sweeping enforcement priorities to execute President Biden’s recent executive order calling for a whole-of-government approach to protecting competition, including by working in conjunction with other federal agencies like the Departments of Defense, Transportation, and Agriculture.
  • Enforcement Priorities Include Technical Violations of HSR Act, Spoliation, Gun-Jumping: Deputy Assistant Attorney General Goodlander emphasized DOJ’s intent to pursue vigorously violations of the HSR Act, including failures to make required premerger notification filings, failures to provide all Item 4 documents, and “gun-jumping” caused by concerted action prior to the satisfaction of the HSR Act’s waiting period. Goodlander also commented on DOJ’s intent to scrutinize merging parties’ conduct during the due diligence phase to investigate whether parties are using due diligence to conceal and accomplish anticompetitive conduct. Other DOJ officials further emphasized that DOJ and the Federal Trade Commission (FTC) are working to ensure that the agencies’ investigations are not harmed by the use of third-party ephemeral communication platforms and to penalize spoliation of evidence contained in such messaging applications.
  • Hostility Toward Freely Granted Divestitures in Merger Investigations: Deputy Assistant Attorneys General Doshi and Andrew Forman conveyed the high bar merging parties face when they offer structural or behavioral remedies, including divestitures, to resolve or head off a DOJ challenge to a merger or acquisition. Doshi and Forman pointed to instances where divestitures and/or carveouts offered in merger transactions have failed and “the American people bear the risk” of anticompetitive harms and asserted that “the idea that a divestiture can cure the feared antitrust issues can’t rest on our hopes of what might happen in the future after the deal and divestiture closes.”
  • Consent Decrees Face Much Stricter Scrutiny: Deputy Assistant Attorneys General Forman, Goodlander, and Kades emphasized the “exacting standard” that must be applied when DOJ is considering entering into a consent decree to resolve a merger challenge. According to the Department officials, the antitrust laws prohibit mergers that may substantially lessen competition, which means that for a consent decree to resolve antitrust concerns, it must eliminate the possibility that a merger could cause harm—an “extremely high bar.”
  • Updated Merger Guidelines to Focus on Relevant [...]

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European Competition Review 2022

by , , , , , , , , and | Feb 6, 2023 | , , , ,

This Review provides legal counsel and their teams easy reference guidance on essential EU competition law developments covering key areas of law and policy. Topics covered include:

  • Cartels & Restrictive Agreements
  • Abuse of Dominant Position
  • Merger Control
  • State Aid
  • Legislative and Policy Developments

Access the special report.



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EU General Court Clarifies Rules on Gun Jumping

by and | Oct 18, 2021 | , , ,

On September 22, 2021, the EU General Court (GC) upheld a decision from the European Commission (Commission) by which it fined telecommunications operator Altice for gun jumping (T-425/18, Altice Europe v Commission). In particular, the GC affirmed that the Commission could impose two separate fines: (i) a fine for implementing a concentration prior to its clearance by the Commission, and (ii) a fine for implementing a concentration prior to its notification. In coming to those findings, the GC also clarified the appropriateness of certain pre-closing covenants and information exchanges.

CASE HISTORY

  • In December 2014, Altice signed a share purchase agreement (SPA) with telecommunications operator Oi to acquire PT Portugal. The deal was subject to EU merger control.
  • Prior to signing, Altice began communications with the Commission to inform it of its intention to acquire PT Portugal. Shortly after signing, Altice sent a case-team allocation request to the Commission and commenced pre-notification discussions with the Commission. Altice formally notified the transaction in February 2015; in April 2015, the Commission cleared the acquisition subject to commitments.
  • A gun-jumping investigation arose following press reports of contacts between Altice and PT Portugal, which took place before the adoption of the Commission’s clearance decision.
  • Three years after clearing the acquisition, the Commission concluded that Altice infringed both the notification obligation and the standstill obligation under the EU Merger Regulation and imposed two separate fines with a total amount of EUR 124.5 million.
  • The Commission found that Altice had the possibility of exercising decisive influence or had exercised decisive influence over PT Portugal before the adoption of the clearance decision and, in some instances, before notification:
    • Certain pre-closing provisions included in the SPA gave Altice the right to veto decisions regarding PT Portugal’s commercial policy.
    • Based on these provisions, Altice had been involved in the day-to-day running of PT Portugal in several instances.
  • Altice brought an action for annulment before the GC, which was dismissed in part. The GC sided with the Commission, but reduced the fine relating to the infringement of the notification obligation by 10% (from EUR 62.25 million to EUR 56.025 million). The GC considered it appropriate to lower the fine because Altice had informed the Commission of the concentration before the signing of the SPA, and it had sent a case-team allocation request to the Commission shortly after signing.

CASE LEARNINGS

  • The notification obligation and standstill obligation can be subject to separate fines. The GC held that the notification obligation (obligation to act) and standstill obligation (obligation not to act) are separate obligations. Because each obligation was violated, the Commission was entitled to impose two fines.
  • Pre-closing provisions included in a SPA cannot afford a purchaser the possibility to exercise decisive influence over the target. EU merger rules do not preclude pre-closing provisions in a SPA aimed at protecting the value of the target between signing and closing. However, such provisions can only be [...]

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Annual EU Competition Review 2018

by | Feb 21, 2019 | , , , , , ,

McDermott’s Annual EU Competition Review summarizes key developments in EU competition rules. During the previous year, several new regulations, notices and guidelines were issued by the European Commission. There were also many interesting cases decided by the General Court and the Court of Justice of the European Union. All these new rules and judicial decisions may be relevant for your company and your day-to-day practice.

In our super-connected age, we can be inundated by information from numerous sources and it is difficult to select what is really relevant to one’s business. The purpose of this review is to help general counsel and their teams to be aware of the essential updates.

This review was prepared by the Firm’s European Competition Team in Brussels, Paris and Germany.

Access the full report.



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Antitrust M&A Snapshot

by , and | Aug 6, 2018 | , , , , ,

United States: April – June 2018 Update

The second quarter of 2018 ushered in a trial defeat for the US Department of Justice (DOJ) and the beginning of a new era at the Federal Trade Commission (FTC). In June, Judge Richard J. Leon of the US District Court for the District of Columbia denied the DOJ’s requested injunction of the AT&T/Time Warner acquisition. The case marked the first litigated vertical challenge by the Antitrust Division in nearly 40 years. DOJ filed a notice of appeal of the district court’s decision. At the FTC, four new commissioners were sworn in in May, with a fifth to join upon the approval of current commissioner Maureen Ohlhausen to the US Court of Federal Claims. With the transition nearly complete, new FTC Chairman Joseph Simons announced plans to re-examine and modernize the FTC’s approach to competition and consumer protection laws, possibly charting a new course for FTC antitrust enforcement.

EU: April – June 2018 Update

In this quarter, we saw two significant developments concerning the issue of gun-jumping. First, the Court of Justice of the European Union (CJEU) clarified the scope of the gun-jumping prohibition, ruling that a gun-jumping act can only be regarded as the implementation of a merger if it contributes to a change in control over the target. Second, the European Commission (EC) imposed a €124.5 million fine on Altice for having breached the notification and the standstill obligations enshrined in the EUMR by gun-jumping. The EC also issued two clearance decisions following Phase II investigations in the area of information service activities and the manufacture of basic metals. (more…)



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Three Things To Know About French Merger Control

by | Dec 13, 2017 | , , , ,

  1. Jurisdictional thresholds

French merger control applies if the turnovers of the parties to a transaction (usually the acquirer(s) including its (their) group(s) of companies, and the target) exceeded, in the last financial year, certain (cumulative) thresholds provided in Article L. 430-2, I of the French Commercial Code (the “Code”):

  • Combined worldwide pre-tax turnover of all concerned parties > €150 million; and
  • French turnover achieved by at least two parties individually > €50 million euros; and
  • The transaction is not caught by the EU Merger Regulation.

Specific (and lower) thresholds exist for mergers in the retail sector or in French overseas departments or communities[1].

In the situation of an acquisition of joint control, a transaction can be notifiable where each of the acquirers meets the thresholds even if the target has no presence or turnover in France.

There is no exception applicable to foreign-to-foreign transactions.

Acquisitions of ‘non-controlling’ minority shareholdings are not notifiable.

  1. Filing is mandatory and failure to file or early implementation can be sanctioned

Under Article L. 430-3 of the Code, a notifiable merger cannot be finalized before its clearance by the French Competition Authority (the “FCA”) but the Code does not provide any specific deadline for the notification. There is no filing fee.

Failure to notify a reportable transaction can be sanctioned by the FCA as follows:

  • A daily penalty can be imposed on the notifying party(ies) until they notify the operation or demerge, as the case may be; and
  • A fine can be imposed on the notifying party(ies) up to:
    • For corporate entities: 5% of their pre-tax turnover in France during the last financial year;
    • For individuals: €1.5 million.

Due to the suspensive effect of the filing, these sanctions also apply when the parties start to implement a notified transaction before receiving clearance (so-called ‘gun jumping’) from the FCA.

Nevertheless, individual exemptions may be granted by the FCA to allow undertakings to close before receiving clearance; in practical terms, exemptions are exceptional and limited to circumstances where insolvency proceedings have been opened, or are about to be opened, in relation to the target.

  1. Timeline of merger control procedure

The majority of notified transactions are cleared in Phase I, which lasts 25 business days as from the receipt by the FCA of a complete notification.

A simplified procedure, which lasts for about 15 business days, is available for non-problematic acquisitions, which is often the case for transactions involving private equity funds. Simplified procedures accounted for about 50% of the notified transactions between May 2016 and May 2017.

Phase II is reserved for problematic acquisitions requiring a deeper examination and takes at least an additional 65 business days.

In addition, parties can pre-notify a transaction with the FCA. The pre-notification procedure can prove to be very useful in order to confirm the notifiability of a transaction, the nature and amount of information that will be required by the FCA [...]

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Dutch Competition Authority Fines Cold-Storage Companies for Exchange of Information in the Context of Merger Talks

by | Mar 31, 2016 | ,

On 23 March 2016, the Netherlands Authority for Consumers and Markets (ACM) announced that it had fined four cold-storage firms for having put in place anticompetitive arrangements while in extended merger talks with one another.  (case number: 13.0698.31|15.0710.31|15.0327.31|15.0328.31). In addition, ACM fined five individuals for their personal involvement in these anticompetitive arrangements. The case at hand serves as a reminder that gun jumping, which is seen as an infringement of the merger control rules, is not the only antitrust risk associated with an M&A transaction.

While in discussions about a possible merger between them, the cold-storage firms frequently exchanged commercially sensitive information such as the price for food storage, current utilization rates of their storage facilities and whether or not they were looking for work. This information exchange, which took place between 2006 and 2009, sometimes resulted in price fixing, customer allocation or bid rigging. (more…)



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German Antitrust Regulator Steps Up the Fight Against Gun-Jumping

by | Jun 30, 2011 | ,

by Martina Maier and Philipp Werner

More than 100 countries worldwide have merger control regimes.  In the majority of these regimes, including the U.S., EU and most EU Member States, parties to a transaction may not close a deal without approval from the competition antitrust regulator.  An infringement of this obligation, or "gun-jumping", carries risks that are generally well understood.  But companies should be aware that the German Federal Cartel Office (FCO) has recently taken a more aggressive approach in its enforcement of gun-jumping, in particular concerning the fining policy for gun-jumping.

To read the full article, click here.



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German Regulator Steps Up Enforcement of Merger Standstill Obligation

by | May 17, 2011 | , ,

by Martina Maier and Philipp Werner

The majority of merger control regimes around the world impose standstill or waiting period requirements for notifiable transactions, e.g. the US, the EU and most EU Member States. If a transaction meets the filing thresholds, it must be notified to the competent antitrust regulator and must not be closed without prior approval by the antitrust regulator or the expiration of the applicable waiting period.

Under German merger control rules, a notifiable merger must not be implemented without prior clearance decision. An infringement of the standstill obligation can (theoretically) lead to fines of up to 10 percent of the group’s worldwide turnover. In addition, the infringement of the standstill obligation renders the contracts ineffective under German merger control rules.

The German Federal Cartel Office (FCO) has recently taken a stricter approach to the enforcement of the merger standstill obligation. In the past, the risk of fines was minor if the merger did not lead to any serious competition concerns, if it was the group’s first infringement of the standstill obligation and if the company itself notified the FCO ex post of the implemented merger.

We see now a growing number of decisions imposing fines for the infringement of the standstill obligation (sometimes referred to as "gun jumping" in the United States). In May 2011, in the latest of a string of such decisions, the FCO imposed a substantial fine for infringement of the standstill obligation although the merger did not lead to any serious competition concerns and although the company had itself notified the implemented merger. These facts were only taken into account as mitigating factors for the calculation of the fine.

The European Commission has also recently imposed fines for the infringement of the standstill obligation.

In this changing environment, the filing requirement and the standstill obligation cannot be seen as a pure formality. It is therefore essential to always verify whether and in which jurisdictions a transaction is notifiable – and not to close the deal before the relevant competition authorities have cleared the deal.



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