Tuesday, September 8, 2020
On September 3, 2020, the U.S. Division of Justice’s (DOJ) Antitrust Division (the Division) revealed the Merger Cures Handbook (the Handbook), issuing new tips for remedying anticompetitive mergers. Particularly, the Handbook units out the Division’s framework to construction and implement treatments that deal with potential anticompetitive results of sure mergers available on the market. These tips are the primary revisions in almost a decade to the Division’s 2004 coverage on merger treatments.
Whereas the Handbook usually follows the 2004 coverage tips, it emphasizes a robust dedication to structural treatments and alerts a shift away from allowing conduct-related treatments, no matter whether or not the merger is horizontal or vertical. The Handbook additional establishes a renewed focus to implement consent decree obligations. Merging firms ought to be aware of these key adjustments to the Division’s merger tips.
Dedication to Efficient Structural Aid
Critically, the Handbook stresses the Division’s robust desire to make use of structural reduction, like divestiture, over conduct-related reduction, the place an organization agrees to not interact in sure conduct. Whereas the Handbook outlines cases the place conduct agreements could also be vital, it makes clear that such circumstances are exceptionally slender — i.e., the place firms can show that the deal creates advantages that can’t be achieved with no merger, a structural repair is just not out there, and/or the settlement utterly cures any issues raised by the merger. Absent distinctive circumstances which will warrant conduct reduction, the Division’s Handbook emphasizes its desire for structural reduction in each horizontal and vertical instances as a clear and efficient treatment that preserves competitors and reduces the Division’s enforcement burden.
The Handbook instructs that merger divestitures ought to embody all property a purchaser must be a long-term competitor. The sale of a stand-alone, current enterprise is beneficial. The Handbook directs the Division to critically and punctiliously scrutinize proposals to promote lower than everything of an current stand-alone enterprise.
Renewed Give attention to Implementing Consent Decree Obligations
The Handbook additional describes how the Division will guarantee consent decrees are absolutely carried out. It highlights commonplace consent decree provisions designed to enhance the effectiveness of consent decrees and the Division’s capacity to implement them. Such commonplace provisions embody a maintain separate and asset preservation provision, a promoting trustee provision, and a provision setting out investigation of compliance and enforcement. Below sure circumstances, further provisions might embody a previous discover provision and a provision establishing a monitoring trustee.
The Handbook additionally identifies the important thing function of the Division’s newly created Workplace of Decree Enforcement Compliance. The Workplace of Decree Enforcement Compliance can be liable for overseeing treatments to which firms agree throughout merger critiques. Division employees will monitor commitments made by firms, such because the submission of periodic studies, and consider the sufficiency of compliance. If employees conclude a celebration has violated a consent decree, the Division can, because it all the time has been capable of do, implement a civil or legal enforcement motion, relying on the character of the alleged violations.
Extra tips set forth within the Handbook apply to structuring and implementing treatments in all of the Division’s merger instances and reaffirm the Division’s objectives to protect a aggressive market:
Cures should protect competitors.
Cures shouldn’t create ongoing authorities regulation of the market.
Non permanent reduction shouldn’t be used to treatment persistent aggressive hurt.
The treatment ought to protect competitors, not shield rivals.
The chance of a failed treatment ought to fall on the merging events, not on shoppers.
The treatment have to be enforceable and clear.
Merging firms ought to seek the advice of with antitrust counsel to make sure proposed treatments to protect competitors are according to the Division’s new tips.
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