Mergers & Acquisitions
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Antitrust M&A Snapshot | FTC and DOJ Continue M&A Transaction Investigation While UK CMA Continues Role as Key Jurisdiction in Merger Clearance Process

Antitrust regulators in the United States and Europe were very active in the final quarter of 2019. The FTC and DOJ continue to investigate and challenge M&A transactions in a variety of industries. Events of this quarter highlight the importance of states in merger enforcement. As well, recent FTC activity highlights the regulators' focus on preventing monopolists from buying nascent competitors. In Europe, the UK CMA continues to expand its role as a key jurisdiction in the merger clearance process, which will only accelerate with Brexit. The EC agreed to clear, subject to conditions, acquisitions in the aluminum production and battery industries as well as in the wholesale supply and retail distribution of TV channels after conducting Phase II reviews. Moreover, the EC opened new in-depth investigations into transactions in the copper refining and engineering sectors. Access the full issue.

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Annual European Competition Review 2019

McDermott's Annual European Competition Review summarizes key developments in European competition rules. During the previous year, several new regulations, notices and guidelines were issued by the European Commission. There were also many interesting cases decided by the General Court and the Court of Justice of the European Union. All these new rules and judicial decisions may be relevant for your company and your day-to-day practice. In our super-connected age, we can be inundated by information from numerous sources and it is difficult to select what is really relevant to one’s business. The purpose of this review is to help general counsel and their teams to be aware of the essential updates. This review was prepared by the Firm’s European Competition Team in Brussels and Paris. Throughout 2019 they have monitored legal developments and drafted the summary reports. Access the full report.

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Notification Threshold Under the Hart-Scott-Rodino Act Increased to $94 Million

The US Federal Trade Commission today announced increased thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and for determining whether parties trigger the prohibition against interlocking directors under Section 8 of the Clayton Act. Notification Threshold Adjustments The US Federal Trade Commission (FTC) announced revised thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) pre-merger notifications on January 28, 2020. These increased thresholds will become effective on February 27, 2020. These new thresholds apply to any transaction that closes on or after the effective date. The base filing threshold, which frequently determines whether a transaction requires filing of an HSR notification, will increase to $94 million. The alternative statutory size-of-transaction test, which captures all transactions valued above a certain size (even if the “size-of-person” threshold is not met), will be adjusted to $376...

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FTC Challenges Axon’s Consummated Acquisition of Body-Worn Camera Competitor

The US antitrust regulators continue to challenge consummated transactions. On January 3, 2020, the FTC filed an administrative complaint against Axon Enterprise, Inc., challenging its consummated acquisition of VieVu, a body-worn camera competitor, from Safariland. The FTC also challenged non-compete agreements that Axon and Safariland signed in connection with the acquisition. The complaint demonstrates the FTC’s continued focus on challenging consummated transactions, and on defining “price discrimination markets” around sets of customers with unique needs. The FTC’s challenge also shows that merging parties should avoid signing non-compete agreements that are not reasonably limited in scope and duration. If these agreements are not appropriately tailored to achieving a legitimate business interest, the FTC may challenge them as anticompetitive. WHAT HAPPENED: In May 2018, Axon acquired VieVu from Safariland for approximately $7 million in upfront cash and...

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California Attorney General Announces Historic $575 Million Settlement of Antitrust Suit Against Sutter Health

California Attorney General Xavier Becerra (AG Becerra) announced on Friday, December 20, 2019, the terms of a comprehensive settlement agreement reached with Sutter Health (Sutter), the largest hospital system in Northern California. WHAT HAPPENED? Procedural History In March 2018, the California Attorney General’s office brought a civil antitrust action under California state law against Sutter alleging violations of California’s Cartwright Act. Sutter owns and operates 24 hospitals and 35 outpatient centers and partners with physician organizations with 5,500 members and 12,000 other physicians in northern California, among other operations. The complaint alleged that costs in northern California have rapidly increased, and are higher than in other parts of the state, in large part due to Sutter’s contractual practices with commercial health plans. The complaint alleged, specifically, that Sutter: Used its market power in certain local markets across all...

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FTC and DOJ Draft Vertical Merger Guidelines Provide Additional Transparency to Agency Practice

For the first time since the Department of Justice Antitrust Division (DOJ) published non-horizontal merger guidelines in 1984, the DOJ and Federal Trade Commission (FTC) issued updated Vertical Merger Guidelines to explain how the antitrust agencies analyze vertical mergers. The guidelines were published in draft on January 10, 2020, and are now open for a 30-day public comment period. WHAT HAPPENED: The DOJ and FTC released draft guidelines outlining the principal analytical techniques, practices and enforcement policies the antitrust agencies will use to analyze vertical mergers and acquisitions. Vertical mergers combine firms or assets that operate at different stages of the same supply chain. For example, vertical mergers or acquisitions could combine companies such as: a satellite maker and a payload provider; an automaker and an aluminum supplier; an automaker and an automotive retailer; a filmmaker and a cable television company; or a pharmaceutical...

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Recent Merger Reviews Demonstrate Increased FTC and DOJ Focus on Acquisitions of Nascent Competitors

Three recent antitrust merger reviews involving nascent competition demonstrate enforcers are paying close attention to acquisitions by industry leaders of emerging, but early-stage competitors. The US antitrust agencies have been criticized for allowing leading technology companies to extend their entrenched positions to multiple markets or technologies through acquisitions. We are now seeing regulators increasing their scrutiny of acquisitions of nascent competitors that were positioning themselves to challenge an entrenched, strong rival. WHAT HAPPENED: Illumina / Pacific Biosciences. On December 17, 2019, the Federal Trade Commission (FTC) announced an action to block Illumina Inc.’s proposed $1.2 billion acquisition of Pacific Biosciences of California (PacBio). The FTC complaint alleged the acquisition of a competitor in the DNA sequencing industry would substantially lessen competition by “eliminating current competition and preventing future...

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Antitrust M&A Snapshot | DOJ Arbitrates Market Definition Dispute While EC Clears Acquisition of Broadband and Energy Networks

There was significant antitrust activity in the third quarter of 2019. In the United States, the Federal Trade Commission (FTC) and Department of Justice (DOJ) continued an active docket challenging M&A transactions. DOJ is resolving antitrust reviews significantly faster than the FTC, following DOJ's 2018 policy establishing a six-month target. The DOJ also made use, for the first time, of its authority to arbitrate a market definition dispute, potentially opening the door for a new tool the DOJ could employ to resolve challenges more rapidly. In the European Union, the European Commission (EC) agreed to clear, subject to conditions, the acquisition of broadband and energy networks following lengthy Phase 2 investigations. Meanwhile, the national European regulators opened new in-depth investigations into commercial radio advertising, software as a service for airlines, autonomous sea surface vehicles and the promotion of live music events (all in the...

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6 Trends in Global Antitrust M&A, and How General Counsel Can Deal with Them

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 merger enforcement changes at the US DOJ, and ways to manage them. Access the full article.

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DOJ and Merging Parties Agree on Unprecedented Arbitration Procedure to Resolve Merger Challenge

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...

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