Slides presented to the Conference Board 2009 Post-Merger Integration Conference, Getting Past the Antitrust Hurdle, What has Changed? What is the Same? June 25, 2009, San Francisco, CA
Morse Slides For Conference Board Merger Integration Program June 25, 2009
1. The Conference Board 2009 Post-Merger Integration Conference Successful Mergers in Today’s Environment Getting Past the Antitrust Hurdle What has Changed? What is the Same? M. Howard Morse Drinker Biddle & Reath LLP Washington, D.C.
6. The Review Process Government Challenges Transaction in Court Consent Decree Requiring Divestiture or Other Relief Government Closes Investigation Depositions of Business Officials Hart-Scott-Rodino Filing (Starts the Clock) “ Clearance” Between DOJ and FTC Early Termination of HSR Waiting Period Respond to Document Requests and Interrogatories Expiration of Initial HSR Waiting Period Respond to Informal Requests During Initial Waiting Period Agency Decision to Challenge Certify Compliance (Starts the Clock) Letter of Intent or Definitive Agreement Agency Decision to Investigate Second Request (Stops the Clock)
7. Substantive Merger Analysis CONCENTRATION depends on product / geographic market definition, only a “starting point for analysis” ENTRY timely, likely and sufficient to deter or counteract effects UNILATERAL MARKET POWER or COORDINATED INTERACTION EFFICIENCIES lower costs, increased output or new products enhance competition BOTTOM LINE: will prices rise, quality fall, service decline or innovation slow to detriment of consumers ?
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9. Merger Enforcement Actions Source: American Antitrust Institute, Transition Report on Competition Policy (data based on DOJ + FTC statistics)
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11. The Obama Administration “ the [Bush] administration has what may be the weakest record of antitrust enforcement of any administration in the last half century… an Obama administration will take seriously its responsibility to enforce the antitrust laws.” “ Ensure Competitive Markets : Foster a business and regulatory landscape in which entrepreneurs and small businesses can thrive, start-ups can launch, and all enterprises can compete effectively while investors and consumers are protected against bad actors that cross the line. Reinvigorate antitrust enforcement to ensure that capitalism works for consumers.”
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15. Back to the Future Innovation Markets – focus on products under development and the pace and diversity of R&D in high tech industries Compare Ciba Geigy/Sandoz (1996) with Genzyme/Novazyme (2004) Vertical Mergers – concern vertical integration may create barriers to entry, raise rivals’ costs, and facilitate collusion, not focused only on horizontal mergers among direct competitors. Compare Time Warner/Turner (1997) with Ticketmaster/Live Nation (2009)
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24. A clean team ensures that sensitive information is not shared directly between merging firms Company B Company A Data request Data request Request Synthesized data / analysis Counsel Clean Team Data Data Ensures that antitrust law is not violated and approves information sharing Steering committee / transformation teams
Transactions may be reportable under the premerger notification programs of a number of foreign countries. Premerger filing requirements vary across the world. Typical conditions giving rise to foreign premerger filing requirements include the acquisition of a local company in cases where the sales and assets of the parties to the transactions meet statutory thresholds. The various premerger filing regimes of different countries around the world have different effects on the timing of acquisitions. Timing requirements of foreign premerger regulations may be different from the more familiar timing requirements of Hart-Scott. In some cases, filing may be required as early as one week from the signing of an acquisition or merger agreement, even if the closing is not yet scheduled. Obtain legal advice early to determine whether any foreign premerger filing requirements apply to a transaction.