This document discusses the challenges that global, diverse companies face in avoiding "gun jumping" when undergoing mergers and acquisitions. Gun jumping refers to implementing transactions before obtaining necessary regulatory approvals or engaging in conduct during regulatory reviews that integrates the companies in violation of hold separate obligations. The challenges include complicated triggering rules, overly burdensome notification processes, and uncertainty around integration activities during reviews. Strategies to avoid gun jumping include constant employee training, early consultation with agencies, and seeking legal guidance. The document calls for clearer guidelines, objective thresholds, shorter review periods, and penalties focused on competitive harm rather than technical violations.

1. The View from the Inside:
Gun Jumping Challenges
Charlesa Ceres
November 27, 2018

2. INTRODUCTION
2017 sales: USD $60.2B
200K+ employees, operating in ~200 countries
Four primary business units and ~1000 legal entities
Otis- elevators, escalators, and moving walkways
UTC Climate, Controls & Security- fire and security
systems, air-conditioning systems, building automation
Pratt & Whitney- aircraft engines
UTC Aerospace Systems- aerospace, defense, and
space systems
Since 2003, UTC has done 252 merger filings in 40 different
jurisdictions
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United Technologies
Global, diverse, large, acquisitive companies
face significant gun jumping challenges

3. CHALLENGES
Companies want to follow the rules, but that can be difficult for the
following reasons
Complicated/unique triggering events or thresholds
Notification requirements that don’t have a material local
nexus component
Overly burdensome processes, unclear or unreasonably
lengthy review timing
Avoiding gun jumping requires diligence
Procedural gun jumping- implementing a transaction without
prior notification where notification is mandatory
Substantive gun jumping- pre-closing conduct in violation of
standstill obligations
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General comments

4. PROCEDURAL GUN JUMPING
Uncertainty regarding the definition of a “transaction” or “concentration”
Unique rules, e.g., intracompany transactions
Subjective criteria, e.g.,
Acquisition of “control” or similar standards (e.g.,
“competitively significant influence”)
Full vs. non-full function joint ventures
Passive vs. strategic investments
Over inclusive or unclear notification thresholds
Low sales thresholds
Thresholds that don’t focus on what is being acquired
Subjective criteria, e.g., market share
Chilling effect on legitimate, non-problematic transactions
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Challenges

5. PROCEDURAL GUN JUMPING
Constant training of business employees on what might trigger
a filing obligation
Review transactions centrally for a consistent approach
Seek outside counsel review and assistance
Consult with agencies pre-notification when available; e.g.,
U.S. and Mexico
Stay up to date on relevant case law, penalties, etc.
Strategies to avoid gun jumping
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6. PROCEDURAL GUN JUMPING
Notification requirements focused on capturing transactions that are
more likely to have an impact on competition
More objective criteria and international convergence on triggering
events and thresholds
Sufficient local nexus, e.g.,
Significant sales in the jurisdiction for the acquired entity or
joint venture
Local presence for the acquired entity or joint venture
Exceptions or less burdensome notifications for transactions unlikely
to raise competition issues
Consultation/waiver process focused on avoiding unnecessary filings
Shorter, definite review periods
6
Wish list

7. SUBSTANTIVE GUN JUMPING
Lengthy, uncertain review periods (harder to keep business in
line for long, indefinite periods of time)
Retaining the value of the transaction, i.e., consent rights
Managing existing and potential agreements between the
buyer and seller, e.g., supply contracts, teaming arrangements
Dealing with customers/suppliers
Dealing with employees
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Challenges

8. SUBSTANTIVE GUN JUMPING
Constant training of business employees on information
sharing and operating as separate companies until closing
(business as usual)
Provide bright-line rules and require that the business seek
legal guidance for any exceptions
Consult with outside counsel
Stay up to date on relevant case law, penalties, etc., but
unfortunately decisions are often very fact specific or the
penalized conduct is extreme
Strategies to avoid gun jumping
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9. SUBSTANTIVE GUN JUMPING
More/clearer guidelines for due diligence and integration
planning activities, e.g.,
Safe harbors for HR related activity or employee
communications
When are joint customer communications allowed?
Penalties focused on whether the conduct has or was likely to
cause competitive harm; no penalties for technical violations
Shorter, more definite review periods
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Wish list