CLE Seminar for the in-house counsel- Steve Libowsky June 8, 2016 Chicago, Illinios

1. Antitrust Analysis in
Mergers and Acquisitions
What are the DOJ and FTC up to These Days
CLE Seminar for In-House Counsel
June 8, 2016
Chicago, Illinois
Stephen D. Libowsky
Partner
Dentons
Chicago
+1 312 876 2520
stephen.libowsky@dentons.com

2. • Longer Investigations
• More Investigations And Cases
• Impact On Deals
• What Does All Of This Mean?
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Uncertainties Encountered During the Assessment of
An M&A Transaction

3. • 2015: At Least 37 Significant Merger Investigations
• Publicly Known
• 7 Complaints; 24 Consent Decrees
• 3 Abandoned Deals
• 3 Closing Statements
• Average Length Of Investigation Was Nearly 3 Months Longer In 2015 Than In
2013
• Longest Was Applied Materials/Tokyo Election, 19+ Months (Deal Abandoned)
• Hertz and Avis waited Nearly 3 years before Hertz Allowed to Buy Dollar-Thrifty
• Shortest Was Mylon/Perrigo, Less Than 2 Months (Consent Order, But Hostile
Takeover Attempt Abandoned)
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Longer Investigations

4. • 37 Significant Investigations: Most In Recent Memory Or In Which Data Available
• Staples/Office Depot
• GE Appliances/Electrolux
• Sherwin Williams/Valspar
• Verisk Analytics/Eagle View Technologies (rooftop aerial measurement products)
• Halliburton/Baker Hughes
• Sysco/US Foods
• What Does FTC/DOJ Do?
• Document Requests to Third-Parties (customers, competitors, complainers)
• Interrogatories
• Second Request to Parties
• CID, Interviews
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More Investigations and Cases

5. • Emphasis on Market Definition and Effect of Potential Entry
• Real Competition
• Evidence
• Litigation Strategy
• Use Of Much Narrower Product Market Definition/Higher Market Concentration
• Changing World
• Niches
• Use Of Both Regional And National Geographic Markets In The Same Matter
• Logistics
• Transportation Costs
• Supply Sources
• Ignore 2010 Merger Guidelines That Market Definition Is Not Paramount
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More Investigations and Cases

6. • Courts Like And Use Market Definition
• Real People
• Real Evidence
• RFPs, RFQs, Business Plans, Business Decisions
• Global Economy Means Global Review And Cooperation; Not Always The Same
Tests
• 120+ Countries
• Different Standards
• Different Agendas
• 4 cases filed by FTC in November and December 2015
• Health Care
• DOJ and FTC Have Beefed Up Trial Capabilities; Threat Of Litigation Is Often
Enough
• 1st Rate Trial Lawyers from Private Practice
• 1st Rate Economists on Staff
• No Politics
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More Investigations and Cases

7. • Who Bears The Risk: Terms Are Now Heavily Negotiated On What Parties Must
Do To Get Deal Approved by Antitrust Regulators; Fight With DOJ/FTC?
• Breakup/Reverse Breakup Fees
• Up To 14 Percent Of Deal Value In Par Petroleum/Mid-Pac Petroleum
• How to value/determine?
• How to assess risk of payment?
• What Triggers Fee/Payment?
• Calendar/Time: date certain, date suit by FTC/DOJ, ruling on suit, end of appeal
• "reasonable efforts," "best efforts," "reasonable best efforts," "all necessary efforts"
• Who pays costs to deal with FTC/DOJ and who decides when to cooperate, fight,
abandon
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Impact on Deals

8. • Longer Contractual Closing And Deal Termination Dates
• How long for FTC/DOJ to act or decide
• States
• Foreign Regulators
• Negotiate remedies to allow deal to proceed
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Impact on Deals

9. • What Does DOJ/FTC Seek?
• Behavioral Or Structural Remedies or Both
• Behavioral
• Maintain prices or limit increases
• Maintain relationships, lines of business
• Dealings with others on "fair, market" terms
• Operate in open source of standard setting manner
• No exclusive dealing, loyalty or bundling discounts
• Structural
• Divest Assets or Technology (who finds buyer and how quickly)
• Divest line of business (who finds buyer and how quickly)
• Guarantee licenses and terms
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Impact on Deals

10. • Less Time To Divest
• No gap in competition
• Divest "Related Assets"
• All assets necessary to run business today and in the future
• Customer agreements
• Supply Agreements
• Technology
• Limit Scope And Duration Of Relationship With Divestiture Buyer
• No dependency for supply, customers
• Transfer Knowledge To Divestiture Buyer
• Employers
• Technology
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Impact on Deals

11. • Attacking Deals After Closing; Evidence Of Anticompetitive Effects Used
• USA v. Bazaarvoice, Inc. No. 13-cv-00133-WHO (N.D. Cal.) (Jan. 8, 2014)
• Case lost in merger planning phase
• Company on its advisors created documents/emails that sunk case
• 21 pages of the Court's opinion simply quoted from Company documents and showed
true economic motive of merger
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Impact on Deals

12. • Gun Jumping Issues Become More Significant
• Must wait for HSR Clearance
• Must have "clean rooms," "deal terms," and "compliance guidelines" pre-merger and
post-signing.
• Must carefully select who does due diligence on competitively sensitive information
• Deals Failing After Huge Time Commitment/Costs
• $$$ wasted
• Time wasted
• Senior Management of Electrolux all lost jobs
• Public market failures
• Multiple And Possibly Inconsistent Discussions With Multiple Regulators
• How Do You Negotiate Closing/Termination Dates?
• How Do You Negotiate Breakup/Reverse Breakup Fees?
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What Does This Mean

13. • How Do You Determine/Predetermine What Can/Should Be Divested?
• How Can You Analyze/Mitigate All These Risks?
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What Does This Mean

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Thank You!
We are very interested in your feedback -
please take a moment to leave a note about this class and the
presenter on your evaluation form.
Stephen Libowsky
Partner
Dentons
T +1 312 876 2520
stephen.libowsky@dentons.com