Fix-It-First and
“Stage 1” Remedies
in the United States
BIICL Trans-Atlantic Dialogue
May 1, 2007
David L. Meyer
Deputy Assistant Attorney General
U.S. Department of Justice
Antitrust Division
UNITED STATES DEPARTMENT OF JUSTICE
ANTITRUST DIVISION
• Basic overview of the U.S. merger review process
• Basic overview of U.S. merger remedy principles
• Stitching it together: remedies “early” in the
merger review process
2
UNITED STATES DEPARTMENT OF JUSTICE
ANTITRUST DIVISION
The U.S. Merger Review Process
•
HSR filing triggers waiting period of 30 days (sometimes less).
•
Waiting period is often terminated early when there are no
competitive issues or issues are easily resolved.
•
Prior to expiration of first 30-day period, reviewing agency may
extend waiting period by making formal request for additional
information – so-called “Second Request.”
•
Parties may, one time, “pull and re-file” prior to issuance of
Second Request – giving reviewing agency another 30 days.
•
Once Second Request is issued, parties may not close until 30
days after “substantial compliance.”
•
Reviewing agency often closes its investigation long before
substantial compliance.
3
UNITED STATES DEPARTMENT OF JUSTICE
ANTITRUST DIVISION
U.S. Merger Remedy Principles
•
The Antitrust Division will not accept a remedy unless there is a
sound basis for believing a violation will occur.
•
Restoring (or preserving) pre-merger levels of competition is the
goal.
•
The remedy must be enforceable; structural remedies are strongly
preferred.
•
If divestitures will occur after closing, the assets to be divested
must be held separate, distinct and saleable.
[Source: DOJ Policy Guide on Merger Remedies]
4
UNITED STATES DEPARTMENT OF JUSTICE
ANTITRUST DIVISION
How Do Potentially
Anticompetitive Mergers Get
Remedied Early in the Process?
•
Parties restructure deal before coming before the agency
•
The “fix-it-first” – a structural remedy that the parties implement
and the Antitrust Division accepts before the merger is
consummated
•
A consent decree – parties negotiate a settlement that resolves
the Division’s competitive concerns
– Division files complaint in federal court alleging violation
– Parties stipulate to entry of a decree (aka the Final Judgment) and
Hold Separate Order
– Parties typically may consummate subject to HSO
– Under the Tunney Act, court reviews whether the proposed Final
Judgment is in the “public interest”
– Court enters Final Judgment
•
A “pocket decree” – a decree executed but not yet filed
5
UNITED STATES DEPARTMENT OF JUSTICE
ANTITRUST DIVISION
The Typical Path –
Resolution via Consent Decree
• Can occur before or after issuance of Second Request.
– Typically, but not always, Second Request is issued to provide
time for negotiations and preserve agency’s jurisdiction to
continue its review.
• Can be used in friendly and hostile transactions.
• Recent example:
– Cemex/Rinker: Second Request issued but not complied with
• A hybrid case: Mittal/Arcelor
– “Pocket decree” negotiated and executed to avoid Second
Request; filed after further investigation completed
6
UNITED STATES DEPARTMENT OF JUSTICE
ANTITRUST DIVISION
The Fix-it-First
• Discussions can occur prior to HSR notification, or postHSR and before or after issuance of Second Request.
• Agency must satisfy itself that “fix” is adequate.
• Recent examples:
– Cinemark/Century:
• Parties divested movie theater in Corpus Christi, Texas to avoid
competitive concerns
• Parties negotiated and completed sale before receiving Second
Request, after having “pulled and re-filed” to get more time.
– American Steamship/Oglebay Norton:
• Parties revised their transaction to encompass six instead of nine
vessels, eliminating competitive concern.
• Revised transaction may require new HSR filing.
7
UNITED STATES DEPARTMENT OF JUSTICE
ANTITRUST DIVISION
A Conceptual Timeline for a
Merger Requiring Remedy
30
Deal Conceived
30
indefinite
30
The Merger Review Process
STRUCTURE SO NOT ANTICOMPETITIVE
FIX IT FIRST
????
CONSENT DECREE, FOLLOWING SUFFICIENT INVESTIGATION
8
UNITED STATES DEPARTMENT OF JUSTICE
ANTITRUST DIVISION