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Transatlantic merger enforcement

Transatlantic merger enforcement. Catriona Hatton November 28, 2007 Brussels. EU-US Mergers: which transactions are caught?. EU: acquisitions of control (includes acquisitions of minority stakes where they are accompanied by rights giving effective control on strategic decisions)

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Transatlantic merger enforcement

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  1. Transatlantic merger enforcement Catriona Hatton November 28, 2007 Brussels

  2. EU-US Mergers: which transactions are caught? EU: • acquisitions of control (includes acquisitions of minority stakes where they are accompanied by rights giving effective control on strategic decisions) • turnover thresholds US: • 'size of transaction test' (value of the assets, voting shares, or partnership interests to be held following the acquisition)  • 'size of the parties' test (assets and turnover of parties relevant for deals below certain value). • at least one party engaged in interstate or foreign commerce    US agencies can review mergers below thresholds and reexamine mergers previously cleared

  3. EU US - which 'Agency'? • Who reviews? • US: DOJ or FTC?  No bright line test for who reviews.  You may get a 'clearance battle‘ • Potential review by state attorneys general  • EU:  European Commission (possibility of referral to national authority) • Who clears? • US: DOJ or FTC • EU: European Commission (even when European Courts overturn decision, back to Commission - Sony BMG) • Who clears subject to remedies? • US: DOJ/FTC consent decrees: - may have criminal and civil penalties for violation - DOJ consent decrees approved by court • EU: European Commission   • Who blocks? • US: DOJ/FTC cannot block- must seek injunction by federal court  • EU:  European Commission (if European courts overturn, back to Commission - Schneider Legrand)

  4. EU US Timing Considerations Up front time before filing generally longer EU: • Nature of the Submission:  US HSR Form (provides only minimal information) vs EU Form CO (latter requires extensive competitive analysis).  • Pre filing drafts and discussions with European Commission  - in practice mandatory Formal Review Period after Filing: • Non complex cases:  US 30 calendar day waiting period or early termination vs. EU 25 working days • Complex cases: US 30 calendar days + second request (time frame not determined, depends on compliance with second request - typically 3-6 months ) + further 30 -60  days EU 25 working days +10 working days+90 working days+15 working days (if remedies offered late) + 'optional' 20 working days. Total max: 160 working days (stop the clock option) 

  5. Differences in substantive analysis? • US Test: will the deal lead to a substantial lessening in competition? • EU Test: will the deal lead to a significant impediment to effective competition, in particular as a result of the creation or strengthening of a dominant position? However, despite broad convergence, differences remain. For example: • EU more conservative approach to vertical mergers • EU tying/bundling theories • EU concern with competitors complaints • US Government - change in the Administration can influence enforcement policies

  6. Approach to Remedies • EU and US preference for structural (divestment) remedies • Sufficient assets to ensure viability of divested business, sold to a buyer that will operate those assets to provide competition equivalent to that being lost as a result of the acquisition  • Upfront buyer/fix-it-first requirements • Limited scope for behavioural remedies.

  7. EU US Remedies - Timing issues • EU Time Squeeze • EU market testing of remedies (US no market testing) • US more flexibility

  8. For more information onHogan & Hartson, please visit us at www.hhlaw.com Baltimore Beijing Berlin Boulder Brussels Caracas Colorado Springs Denver Geneva Hong Kong London Los Angeles Miami Moscow Munich New York Northern Virginia Paris Shanghai Tokyo Warsaw Washington, DC

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