Today, companies looking to merge with others across jurisdictions would do well to consider antitrust issues at the beginning of the transaction process; regulatory antitrust challenges to M&A are increasing globally. On Corporate Counsel, McDermott partners Jon B. Dubrow and Joel R. Grosberg discuss six risks to deals from antitrust regulators, such as vertical

WHAT HAPPENED:

  • On September 4, 2019, the US Department of Justice’s Antitrust Division (DOJ) sued to block Novelis Inc.’s proposed $2.6 billion acquisition of Aleris Corporation.
  • DOJ alleged that the transaction would combine two of only four North American producers of aluminum auto body sheet (ABS). DOJ further alleged that Aleris was a new and disruptive rival supplier of aluminum ABS whose expansion into the North American market immediately impacted pricing.
  • Prior to DOJ’s suit to block the transaction, the merging parties and DOJ agreed that the dispute boiled down to a single dispositive issue: whether aluminum ABS constitutes a relevant product market, and specifically, whether the market for aluminum ABS also includes steel ABS.
  • DOJ and the merging parties agreed to refer this product market issue to arbitration pursuant to the Administrative Dispute Resolution Act of 1996 (5 U.S.C. § 571 et seq.) and the Antitrust Division’s implementing regulations (61 Fed. Reg. 36,896 (July 15, 1996).
  • In a filing in federal court the DOJ explained that it decided to arbitrate rather than litigate the merger in federal court because all sides agreed that the case turned on the single question of product market definition and referring the matter to arbitration would lessen the burden on the Court and reduce litigation costs to the merging parties and to the United States.


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The second quarter of 2019 proved to be a busy season for antitrust matters. In the United States, agencies continued to be aggressive and blocked transactions or required significant remedies. They cleared three mergers where divestitures were required; and in the face of FTC or DOJ opposition, companies abandoned several transactions, including between Republic National

What Happened:

  • Last week, the Antitrust Division reported that it has changed its Justice Manual to state that it will consider antitrust compliance at the charging stage in criminal antitrust investigations, instead of waiting for plea negotiation or the sentencing stage.
  • Previously, the Antitrust Division had granted leniency only to the first whistleblower to come completely clean. Under the Antitrust Division’s policy reversal, this is no longer the only way to gain credit with the Antitrust Division, and the Antitrust Division will now consider if the Company has “robust” compliance programs when determining whether to bring charges.
  • With the announcement this past Thursday, the Antitrust Division published a guidance document that focuses on evaluating compliance programs in criminal antitrust investigations. This is the first time the Antitrust Division has published guidance on evaluating compliance programs in the context of criminal antitrust violations, and companies can now use this document to determine whether their compliance programs are in line with the Antitrust Division’s standards.
  • The Antitrust Division lists certain factors that Antitrust Division prosecutors should consider when evaluating the effectiveness of an antitrust compliance program. These are:
    1. The design and comprehensiveness of the program
    2. The culture of compliance within the company
    3. Responsibility for, and resources dedicated to, antitrust compliance
    4. Antitrust risk assessment techniques
    5. Compliance training and communication to employees
    6. Monitoring and auditing techniques, including continued review, evaluation and revision of the antitrust compliance program
    7. Reporting mechanisms
    8. Compliance incentives and discipline
    9. Remediation methods
  • In general, when analyzing a program, the Antitrust Division will ask whether the compliance program is well designed, whether it is being applied earnestly and in good faith, and whether it works.
  • Finally, the Antitrust Division also revised sections of its Manual on the processes for recommending indictments, plea agreements and selecting compliance monitors.


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What Happened:

  • The Federal Trade Commission (FTC), along with the Antitrust Division of the Department of Justice (DOJ), approved amendments to the Hart-Scott-Rodino (HSR) Rules and the instructions for completing the HSR Form.
  • After the amendments take effect on September 25, 2019, HSR filers will be required to use new 10-digit North American Product Classification

2019 MID-YEAR UPDATE

The Department of Justice (DOJ) Antitrust Division announced three new investigations and several developments in its other investigations, including new investigations in the commercial flooring industry, online auctions for surplus government equipment and insulation installation contracts. The Antitrust Division also released its Spring 2019 Division Update, which notes that the Division

Companies involved in the government contracting industry should take note that the government is honing in on anticompetitive conduct affecting government procurements. The federal government has demonstrated an increased interest in this area, and companies should refresh and audit their compliance programs to avoid hefty civil and criminal penalties and potential prison terms for implicated

2018 saw a significant upswing in antitrust litigation against health care providers; 27 cases were filed in 2018 versus 17 in 2017. In the latest Antitrust Update for Health Care Providers, we discuss what caused the notable rise, what kinds of cases were brought over the past two years and how they were decided,

The first quarter of 2019 proved to be as active as ever for antitrust regulators in both the United States and Europe. In the United States, vertical merger enforcement was the focus of a few high-profile matters. The US DOJ has been working on an update to the Non-Horizontal Merger Guidelines, possibly providing clarification for

WHAT HAPPENED:

  • The Department of Justice filed a Statement of Interest in three related cases in the Eastern District of Washington yesterday dealing with alleged “no-poach” (or non-solicitation) agreements between franchisors like Carl’s Jr, Auntie Anne’s and Arby’s and their franchisees.
  • In the statement, the DOJ distinguished between “naked” no-poach agreements between competitors and the