Mergers & Acquisitions Archives - Page 26 of 49

Mergers & Acquisitions

Deputy Director Dafny: FTC focuses on Diversion Ratios, Not Geographic Markets for Hospital Mergers

by McDermott Will & Emery | Oct 4, 2012 | FTC Developments, Healthcare Antitrust, Mergers & Acquisitions

During an American Bar Association (ABA) program on antitrust and health care issues on October 1, 2012, U.S. Federal Trade Commission (FTC) Deputy Director for Health Care and Antitrust, Leemore Dafny, said that the FTC will focus on how patients purportedly react to price increases, as measured by "diversion ratios," when deciding which hospital mergers to investigate further for potential anticompetitive effects.

Dafny stated that the FTC will focus on diversion ratios rather than geographic markets because relying on geographic market overlaps in hospital mergers may do a poor job of identifying the true source of potential competition problems. Instead, the FTC has and will continue to evaluate hospital mergers to look at whether patients would be willing and able to substitute one hospital for the other if one hospital decided to raise prices for services, using the diversion ratio or the proportion of patients who would switch between them in response to a change in prices. Importantly, the diversion ratio does not rely on any one particular geographic market definition to give the FTC what it believes to be an accurate idea of how a hospital merger might affect competition.

To the extent the FTC considers geography, its staff begins by examining the primary service area of the hospitals – the area from which the hospitals draw about 75 percent of their patients – when conducting a preliminary evaluation of a merger to determine whether overlaps exist. According to Dafny, the more significant the overlaps, the higher the likelihood of a potential competition problem.

Italian Competition Authority Mandatory Fee Due by 30 October 2012

by McDermott Will & Emery | Oct 1, 2012 | Italian Developments, Mergers & Acquisitions

by Veronica Pinotti, Martino Sforza and Nicolò Di Castelnuovo

In response to significant feedback, the Italian Competition Authority (the Authority) clarified the following issues concerning the new mandatory fee that was discussed in our recent blog post, Italian Competition Authority Mandatory Fee Due by 30 October 2012:

In relation to foreign companies, only those registered in the Companies Register (Registro delle Imprese) before any of the Italian Chambers of Commerce, will pay the mandatory fee (provided that their revenues exceed €50 million). Foreign companies are subject to registration with the Companies Register if they have an administrative/secondary seat in Italy, or their main business is in Italy.
Companies belonging to a group are subject individually to the mandatory fee, provided that their revenues exceed the €50 million threshold. When several companies which are subject to the mandatory fee, belong to the same group, the maximum amount—equal to €400,000 for the year 2013—refers to the entire group. The payment may be carried out by the parent company, individually for each of the subsidiaries that are subject to the fee. However, if the group’s liability reaches the maximum threshold, a single payment by the parent company is allowed. In this situation, the Authority must be provided with a chart specifying the details of all companies subject to the fee and for which the payment is being made.
For the companies drafting their financial statements in accordance with international accounting standards, the bases for calculating the fee are the revenues corresponding to item A1 on the Income Statement, drafted in accordance with Italian accounting standards. The Authority has not provided any further guidance on this specific issue but it should be possible to determine those revenues by reclassifying the Income Statement’s items on the basis of the criteria set out in Article 2425 of the Italian Civil Code.

Italian Competition Authority Mandatory Fee Due by 30 October 2012

by Jackie Sinn | Sep 4, 2012 | Italian Developments, Mergers & Acquisitions

by Veronica Pinotti and Martino Sforza

From 1 October 2012 until 30 October 2012, public limited companies based in Italy that have total revenues exceeding EUR 50 million must pay to the Italian Competition Authority (ICA) a new mandatory fee, which replaces the current filing fees for merger transactions.

Entities Subject to the Fee

Public limited companies (e.g., S.p.A. or S.r.l.) with total revenues—according to the latest financial statements (item A1 of the income statement)—exceeding EUR 50 million are subject to the fee.
For banks and financial institutions, the amount of revenue for the purposes of calculating the fee is one-tenth of the institution’s assets on its balance sheet.
The revenues of insurance companies are equal to the amount of premiums collected. Subsidiaries and associate companies belonging to a group must each pay the fee separately on the basis of the revenues set out in their financial statements.

Contribution Amount

The amount of the fee is equal to 0.08 ‰ of the revenues set out in the latest financial statements. The fee cannot exceed EUR 400,000.

Terms of Payment

For 2013, the fee must be paid in advance to the ICA from 1 October 2012 until 30 October 2012, and the payment must be communicated to the ICA by 30 November 2012.

ECJ Rules Access to Documents Can Be Denied on Basis of General Presumption That Disclosure Undermines Merger Control Proceedings

by Emily Townsend | Jul 5, 2012 | EC Developments, Mergers & Acquisitions

by Philipp Werner and David Henry

There is a general presumption that the grant of public access to documents relating to merger control proceedings would undermine the purpose of those proceedings. The Commission does not therefore have to carry out an individual examination of each document before deciding to refuse access under EU transparency legislation.

To read the full article, click here.

China Streamlines Antitrust Notification Process

by Emily Townsend | Jun 27, 2012 | Chinese Developments, Joint Ventures/Competitor Collaboration, Mergers & Acquisitions

by Henry L.T. Chen, Frank Schonveld and Brian Fu

The Ministry of Commerce of China (MOFCOM) recently promulgated a new amended merger notification form along with instructions for completing the form. In doing so, MOFCOM aims to further regulate the procedures regarding antitrust review of large mergers, acquisitions and joint ventures; to promote transparency in the notification procedure; and to improve the efficiency of antitrust review.

To read the full article, please visit: https://www.mwechinalaw.com/news/2012/chinalawalert061c.htm.

Pennsylvania Attorney General Requires Merging Hospitals to Contract Separately with Payors in Settlement Agreement

by McDermott Will & Emery | Jun 15, 2012 | Mergers & Acquisitions

by Jeffrey W. Brennan, Ashley McKinney Fischer and James Buchanan Camden

In addition to the federal antitrust enforcement agencies, state attorneys general continue to take an active role in antitrust enforcement, especially in the health care industry. Last week, the Pennsylvania Attorney General announced that it had entered into a settlement agreement with two merging hospitals requiring the hospitals to contract separately with payors post-closing. Early on in transaction planning, hospitals and health systems considering transactions with potential competitive implications should identify the rationale for and benefits of the transaction, in preparation for both state and federal antitrust agency review.

To read the full article, click here.

Application of the ‘Priority Principle’

by Emily Townsend | Jun 14, 2012 | EC Developments, Mergers & Acquisitions

by Lionel Lesur

The EU Commission was notified of the Seagate/Samsung transaction and the Western Digital/Hitachi transactions – both mergers involving hard drive disk businesses – within days of each other. In its decision on the Seagate/Samsung transaction (published on May 10, 2012), the EU Commission explains its different treatment of the two mergers.

The EU Commission explains that the ‘priority principle’ requires them to review a deal’s impact on competition according to the date the deal was notified. Therefore, because Seagate/Samsung was notified first, the EU Commission examined the deal based upon the competitive conditions existing at the time of notification and without considering the potential impact of a second deal which was notified only one day later.

Reminder of the facts

Seagate Technology had prenotification contacts with the Commission March 14, 2011 and publicly announced and notified its acquisition of Samsung’s hard disk drive business on April 19, 2011. After a Phase II investigation, the EU Commission unconditionally cleared the transaction on October 19, 2011, concluding that it would not significantly impede effective competition in the hard disk drive market because four competitors would remain.

Western Digital proposed to acquire Hitachi’s hard drive business and notified this transaction on April 20, 2011, after Seagate/Samung. Western Digital and Hitachi publicly announced the deal on March 7, 2011 and had prenotification contacts with the Commission on March 10, 2011 – both dates earlier than the same events for Seagate and Samsung. The Western Digital/Hitachi transaction was also cleared by the EU Commission after a Phase II investigation on November 23, 2011, but was subject to several significant remedies (and application of the ”up-front buyer" system) unlike Seagate/Samsung because the EU Commission carried out its competitive analysis on the basis that only three hard disk drive competitors would remain.

Explanation of the ‘priority principle’ applied by the EU Commission

In its decision concerning the Seagate/Samsung transaction, the EU Commission recognizes having assessed the transaction according to a “priority principle” ("first come, first served" approach), based on the date of notification. The EU Commission defended the application of this “priority principle” and noted that it had already been applied in several previous cases (most recently in TomTom/Tele Atlas, Commission Decision of May 14, 2008) but the EU Commission had not expressly explained its approach as they have in the present case.

According to the EU Commission, the relevant framework to evaluate the effects of a transaction is the competitive conditions existing at the time of notification ("It is neither necessary nor appropriate to take into account future changes to the market conditions resulting from subsequently notified transactions that require approval from the Commission."). The EU Commission states that the date of notification is a clear and objective criterion for applying the priority principle. It "takes the view that the priority principle, based on the date of notification, is the only one that ensures sufficient legal certainty, transparency and objectivity and respect the other provisions and aims of the Merger Regulation."

The [...]

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PA Hospital Merger May Proceed With Restrictions on Rate Negotiations and Other Conduct in Settlement with AG

by Emily Townsend | Jun 8, 2012 | Healthcare Antitrust, Mergers & Acquisitions

by Jeff Brennan

On June 7, 2012, Pennsylvania, through its Attorney General (AG), filed an antitrust complaint and consent order in U.S. District Court (M.D. Pa.), settling charges that Geisinger Health System’s acquisition of Bloomsburg Hospital violated section 7 of the Clayton Act and the state common law prohibition on suppression of competition. The core allegation is that the merging of Geisinger and Bloomsburg — two of three principal rival hospitals in the Columbia County area and employers of physicians — would lead to higher prices for (i) primary and secondary inpatient acute care services and (ii) primary and non-tertiary specialist physician services. Notably, the AG did not seek to enjoin the deal but elected to accept a multi-faceted "conduct" remedy.

Probably the most significant of the many conduct restrictions is the enablement of health plans to trigger (with AG involvement) independent third party review of Geisinger’s price proposals. Geisinger’s prices must be based on Bloomsburg Hospital costs, not System costs, to obtain "a reasonable profit margin for similarly sized and well run community hospitals." In other words, Geisinger may not readily apply System prices to Bloomsburg. The settlement also prohibits Geisinger from requiring payors to contract with the whole System in order to contract with Bloomsburg, and from requiring a payor to exclude a competitor hospital from the network in order to obtain a contract with Geisinger. A few observations:

PA implied that it accepted a conduct remedy over an injunction in light of Bloomsburg’s dire financial condition. Bloomsburg said that by October 2012 it would have insufficient cash to meet its obligations and could not continue operations. The AG said it consented to the order "[g]iven the Acquired Parties’ financial condition and the potential for the loss of 900 jobs."
The Federal Trade Commission (FTC) was not a party to this action, for reasons we do not know. The FTC has traditionally been unwilling to accept conduct restrictions in lieu of divestitures to resolve concerns that a prospective hospital merger is anticompetitive. An exception was in the unusual case of a merger that had been consummated for seven years prior to the FTC’s finding of antitrust liability, at which point the FTC concluded that divestiture would do more harm than good and instead required separate contracting between the merged hospitals. (This was 2007’s decision in Evanston Northwestern/Highland Park.)
The Geisinger case is one of "good news/bad news" for hospitals. The good news is that, at least at the state level, it shows a potential path forward for deals that raise antitrust concerns. The bad news is that consummation came with the cost of an extensive set of restrictions on contracting and other activities that require rigorous monitoring for compliance. Especially for hospitals facing difficult financial challenges, moreover, there is — again, from the limited perspective of state enforcement — the good news that alliances with a large and financially sound competitor may be obtainable, but also the bad news that the rival’s more favorable rate structure [...]

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Liberalizations Decree: Main Relevant Changes and Powers of the Italian Competition Authority

by McDermott Will & Emery | May 23, 2012 | Italian Developments, Mergers & Acquisitions

by Veronica Pinotti and Martino Sforza.

The main developments in antitrust are:

1. Merger Control (Art. 5-bis)

From January 1, 2013:

The Italian merger control thresholds will be cumulative and no longer alternative (i.e. the combined turnover in Italy of all undertakings concerned exceeds € 468 million AND the Italian turnover of the target exceeds € 47 million);
The current mandatory merger control filing fee (i.e. 1.2 percent of the value of the transaction in a range of € 3,000 and € 60,000) will be replaced by a mandatory fee of 0.08 per thousand of the turnover applicable (regardless of a transaction being filed) to all companies having a turnover exceeding € 50 million (such contribution shall be paid by October 30, 2012 for the first year, and July 31, 2013 for the following years).

2. New Bodies

Business Courts (Art. 2) – by September 24, 2012, the IP specialized sections of Italy’s Tribunals and Appeal Courts (renamed “business specialized sections”) will have jurisdiction also over all claims for damages caused by national and EU antitrust infringements, as well as corporate and public procurement matters involving limited companies.
Transport Authority (Art. 36) – it will be created within May 31, 2012 and will have supervising powers on the transport sector and the access to relevant infrastructures (it will be fully operative following the adoption of its implementing decrees).

3. Main New Powers of the Authority

Unfair clauses (Art. 5) – since March 24, 2012, the Authority is responsible to ensure protection against unfair contractual clauses in business to consumer agreements and it may impose fines up to € 50,000.
Unfair commercial practices (Art. 7) – since March 24, 2012, extension of the Authority’s powers in the enforcement of the unfair commercial practices rules to protect, not only consumers, but also small enterprises (with less than 10 employees and a turnover of less than € 2 million).
Food sector (Art. 62) – from October 25, 2012, the Authority will have the power to supervise and may apply fines up to € 500,000, in case of breach of the new rules concerning agreements in the food sector (i.e. written form and other specific requirements; obligation to pay within 30 days for perishable goods and within 60 days for all other goods).
Public Utilities (Art. 25) – since March 24, 2012, the Authority shall now be consulted in various fields, including the public utilities local award procedures (where the population is above 10,000 inhabitants).

4. Banks and Insurance

Banks (Art. 28) – from July 1,2012, banks shall propose to their customers the offers of at least two different insurance groups, if they require a life insurance as a condition to issue a mortgage.
Insurance (Art. 34) – no later than July 24, 2012, car insurance intermediaries will be required to inform their customers about the contractual conditions proposed by at least three different insurance groups.

5. Class Action (Art. 6)

Amendments to the current rules (entered [...]

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