Mergers and Joint Ventures

• Pages: 65-102

65

CHAPTER III

MERGERS AND JOINT VENTURES

A. We Are Contemplating Merging with or Acquiring Another

Company. What Sort of Antitrust Approvals Will We Need?

What Are the Procedures for Obtaining These Approvals in the

United States?

In the United States mergers and acquisitions are reviewed by one of

two federal agencies, the Federal Trade Commission (FTC) or the

Antitrust Division of the Department of Justice (DOJ). Which agency

receives “clearance” to review a particular transaction will generally

depend upon the agencies’ relative expertise with respect to the industry

(or industries) at issue.

Worldwide, close to one hundred jurisdictions have enacted merger

control regimes, which, in many cases, require notification and approval

before a transaction may be closed.

Below, we discuss three separate questions: (1) in what jurisdictions

will a merger notification be required?; (2) what are the U.S. merger

notification rules?; and (3) if U.S. approval is required, what is the

process for the federal government’s review of the notified transaction?

1. In What Jurisdictions Will a Merger Notification Be Required?

The jurisdictions where antitrust approvals must be sought will

depend on the nature of the transaction and the jurisdictions in which the

merging partie s derive revenues .

a. The United States

In the United States the premerger notification process is governed

by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR

66 Frequently Asked Antitrust Questions

Act).1The HSR Act and regulations provide criteria and exemptions that

determine whether a filing is required.2

For transactions that must be reported, the HSR Act imposes an

“initial waiting period” for agency review before the transaction can be

completed. For most acquisitions the initial waiting period is thirty days.

For cash tender offers and certain acquisitions subject to bankruptcy

approval the initial waiting period is fifteen days. During the initial

waiting period the FTC or the DOJ will analyze the proposed

transaction’s likely effects on competition under Section 7 of the Clayton

Act, which prohibits transactions that may have “the effect” of

“substantially [lessening] competition, or [tending] to create a

monopoly.”3In practice agencies consider under the Horizontal Merger

Guidelines whether the parties will have the ability and incentive to take

anticompetitive actions after the merger.4The agency then decides

whether to permit the transaction to proceed without further

investigation. The waiting period can be extended if the reviewing

agency issues a request for additional information, typically referred to

as a “Second Request.” See part A.3 of this chapter for a more detailed

discussion of the merger review process in the United States, including

an overview of the information that must be included in the HSR filing

(HSR Filing).

The parties also should consider whether they are required to seek

approval from other federal agencies that regulate transactions in specific

industries, such as the Federal Communications Commission, the

1. Hart-Scott-Rodino Antitrust Improvements Act of 1976, Pub. L. No.

94-435, § 201, 90 Stat. 1383, 1390 (1976) (codified as amended at 15

U.S.C. § 18a), amending the Clayton Antitrust Act of 1914, Pub. L. No.

63-212, 38 Stat. 730 (1918). The regulations adopted by the FTC to

implement the HSR Act DSSHDU DW  &)5 í 7KH )7& LV

charged with administering the HSR premerger notification process,

although filings are made to both the FTC and the DOJ, and both

agencies are responsible for substantive reviews of proposed transactions,

although in any particular transaction only one of the agencies conducts

the investigation.

2. See part A.2 of this chapter for a more in-depth discussion of these

criteria and exemptions.

3. 15 U.S.C. § 18.

4. U.S. DEP’T OF JUSTICE &FED.TRADE COMM’N,HORIZONTAL MERGER

GUIDELINES (2010) [hereinafter 2010 HORIZONTAL MERGER

GUIDELINES], available at http://www.justice.gov/atr/public/guidelines/

hmg-2010.html.

Mergers and Joint Ventures 67

Department of Transportation, or the Federal Reserve. Although in-depth

discussion of these agencies’ reporting requirements is beyond the scope

of this book, many agencies include competition issues in their analysis

of whether to approve specific transactions within their substantive

jurisdiction.

b. Outside of the United States

To date nearly one hundred jurisdictions worldwide have enacted

merger review laws or created merger notification regimes, or both.5

These jurisdictions differ with respect to critical issues such as the

revenue or other thresholds suff icient to trigge r merger review, when

filings must be made, whether a party may close a transaction prior to

obtaining regulatory approval, fines or other penalties for failing to

notify, the substantive standards used to assess a transaction, the

remedies employed to address competition concerns, and the degree to

which each jurisdiction seeks to coordinate with the merger review

process in other countries.6Many jurisdictions impose mandatory

5. In addition to the European Union, the list includes: Albania, Argentina,

Australia, Austria, Belarus, Belgium, Bolivia, Bosnia & Herzegovina,

Brazil, Bulgaria, Canada, Chile, China, Colombia, Croatia, Cyprus,

Czech Republic, Estonia, Faroe Islands, Finland, France, Germany,

Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy,

Japan, Kenya, Kore a, Latvia, Liechtens tein, Lithuania, Luxembourg,

Macedonia, Malta, Mexico, Namibia, Netherlands, New Zealand,

Nigeria, Norway, Pola nd, Portugal, Romania, Ru ssia, Saudi Arabia,

Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden,

Switzerland, Taiwan, Thailand, Turkey, Ukraine, United Kingdom,

United States, Uruguay, Venezuela, and Zambia. See GLOBAL

COMPETITION REVIEW,MERGER CONTROL 2013 (2012) [hereinafter

MERGER CONTROL 2013].

6. See ABA SECTION OF ANTITRUST LAW,MERGER REVIEW PROCESS,

Chapter II, “Representing Parties in Mergers Subject to

Multijurisdictional Review” (2012) [hereinafter MERGER REVIEW

PROCESS] for in-depth commentary on the specific concerns at issue in

multijurisdictional clearance and procedures in certain key jurisdictions;

see also MERGER CONTROL 2013, supra note 5, for co mmentary on the

procedural and substantive features of each international jurisdiction with

a transaction control regime. In addition, the website of the International

Competition Network includes useful links to foreign transaction control

laws at http://www.internationalcompetitionnetwork.org/working-

groups/current/mer ger/templates.aspx.