The Merger Review Process: A Step-by-step Guide to U.s. And Foreign Merger Review

by Gotts, Ilene K.

• ISBN13: 9781590316528
• ISBN10: 1590316525
• Edition: 3rd
• Format: Paperback
• Copyright: 2006-11-01
• Publisher: Natl Book Network

Summary

This comprehensive guide to the process and procedures of merger review at the federal agencies makes the federal review process more comprehensible and accessible to parties and their counsel.

Table of Contents

Foreword	xiii
Preface	xv
Background
Statutory Authority	1	(21)
Substantive Statutes	1	(1)
Clayton Act Section 7	1	(5)
Sherman Act	6	(1)
FTC Act Section 5	7	(1)
State Laws	7	(1)
Investigative Statutes	8	(1)
Clayton Act Section 7A (The HSR Act)	8	(7)
Additional Antitrust Division Investigatory Powers -- The Antitrust Civil Process Act	15	(1)
Additional FTC Investigatory Powers	16	(1)
State Investigatory Powers	17	(1)
Jurisdictional/Enforcement Statutes	18	(1)
Antitrust Division Enforcement	18	(1)
FTC Enforcement	19	(1)
Private Enforcement	20	(1)
State Attorneys General Enforcement	21	(1)
Other Regulatory Agency Enforcement	21	(1)
Foreign Laws	21	(1)
Overview of the Enforcement Agencies and the Review Process	22	(10)
The Federal Agencies	22	(1)
The FTC	22	(4)
The Antitrust Division	26	(1)
The Review Process	26	(1)
Initial Review and the Investigation	26	(3)
Reviewers and Ultimate Decision Makers	29	(1)
The Antitrust Division	29	(1)
The FTC	29	(1)
Enforcement Actions	30	(2)
Confidentiality Considerations	32	(14)
Confidentiality of HSR Materials	32	(3)
Disclosure to State Attorneys General	35	(5)
Disclosures to Foreign Antitrust Enforcement Authorities	40	(1)
Confidentiality of Materials Submitted in Response to Compulsory Process	41	(3)
Confidentiality of Voluntary Submissions	44	(2)
The Sarbanes-Oxley Act of 2002 and its Implications	46	(2)
The Exon-Florio National Security Review Process	48	(4)
Before the Hart-Scott-Rodino Filling
Making the Initial Substantive Assessment	52	(8)
Public Information	53	(2)
Internal Client Documents	55	(1)
Client Personnel	56	(1)
Industry Participants	57	(2)
Industry Consultants and Associations	59	(1)
Antitrust Economists	59	(1)
Understanding and Explaining the Hart-Scott-Rodino Merger Review Process	60	(7)
Determining Whether the Transaction Is Reportable under the Hart-Scott-Rodino Act	67	(6)
Valuation of Transactions	73	(2)
Acquisition of Assets	73	(1)
Acquisition of Voting Securities	74	(1)
Controlling Exposure	75	(8)
Item 4(c) Documents	75	(2)
Coordinating with Other Competition Counsel	77	(2)
Coordinating with Other Filings and Releases	79	(1)
Managing Trade and Press Relations	79	(2)
Developing a Strategy	81	(2)
Analyzing and Shaping the Parties' Contractual Obligations	83	(11)
Provisions That Govern the Allocation of Transaction-Related Antitrust Risk	83	(4)
Provisions That May Give Rise to Antitrust Exposure	87	(5)
Agreements among Counsel	92	(2)
Preparing the HSR Filing	94	(10)
Sources of Advice	94	(3)
Completing the Form	97	(1)
Voluntary Submissions	97	(1)
Estimates and Noncompliance	98	(1)
Sources of Information	99	(1)
The Mechanics of Filing	100	(1)
Delivery of the Filing	100	(1)
Filing Fee	100	(1)
Faxed Signature Pages	101	(1)
28 U.S.C. Section 1746 --- Declaration in Lieu of Notarized Statement	101	(1)
Notarial Seals	101	(1)
Confidentiality	101	(1)
Copies of Preprinted Form	102	(1)
Practitioner's Checklist	102	(2)
Prefiling Communications with the Enforcement Agencies	104	(6)
When Such Communications Should Be Considered	104	(3)
Types of Submissions -- Form and Format	107	(1)
Confidentiality and Possible Impact on Claims of Privilege	108	(1)
Prefiling Meetings	108	(2)
Other Vehicles for Communication with the Agencies	110	(1)
Prefiling Investigations Initiated by the Enforcement Agencies	110	(2)
Procedures at the Antitrust Division	110	(1)
Procedures at the FTC	111	(1)
The Role of In-House Counsel	112	(7)
Establishing an HSR Compliance Program	113	(1)
Control over Disbursements	113	(1)
Tracking Investments	113	(1)
Warrant and Option Exercises and Conversions	114	(1)
Advice to Executives with Authority over Transactions	114	(1)
Acquisitions by Subsidiaries	114	(1)
Prefiling Issues Involving a Particular Transaction	114	(1)
Preparation of the HSR Filing	115	(1)
Information about the Company	115	(1)
Item 4(c) Documents	116	(1)
Second Requests	116	(1)
Contacts with the Reviewing Staff	116	(3)
During the Initial Waiting Period
Review of the HSR Filing for Compliance	119	(8)
Preclearance Review	127	(3)
Assignment within the Agency	127	(1)
Preliminary Investigation	128	(1)
Nonpublic Sources of Information	129	(1)
Public Information	129	(1)
Conduct of the Initial Investigation	130	(1)
Preclearance Communications with Agency Staffs	130	(4)
Preclearance Contacts	130	(3)
Forum Shopping	133	(1)
The Clearance Procedure	134	(2)
Overview of the Clearance Procedure	134	(1)
Agency Escalation of a Clearance Dispute	135	(1)
Preliminary Investigation after Clearance	136	(2)
Requests to the Parties	136	(1)
Interviews with Customers, Competitors, and Complainants	137	(1)
Conclusion of the Initial Investigation	138	(1)
Issuance of a Second Request	138	(4)
Internal Mechanism at the FTC	138	(2)
Internal Mechanism at the Antitrust Division	140	(1)
Preparation of the Second Request	140	(1)
Alternatives to Issuance of a Second Request	141	(1)
Tactical Options Available to Counsel	142	(15)
Transactions That Do Not Raise Serious Antitrust Concerns	142	(1)
Transactions That Raise Substantive Antitrust Concerns	143	(2)
Working with Counsel for the Other Party	145	(1)
Deciding Whether to Hire an Economist	146	(1)
Submitting Information to the Reviewing Agency	147	(2)
Preparing a ``White Paper''	149	(1)
Identifying Customers for Agency Interviews	150	(1)
Making a Presentation to the Agency	151	(3)
Preparing to Respond to a Second Request	154	(3)
While Compiling the Second Request Response
Negotiating the Scope of the Second Request	157	(18)
Description of the Negotiation Process	161	(2)
Timing of Negotiations	163	(1)
Preparation for the Negotiations	164	(4)
Whether to Raise Particular Issues	168	(1)
Limitations That Are Routinely Granted	169	(1)
Cutoff Date	169	(1)
Time Period Covered	170	(1)
Transactional and Financial Documents	170	(1)
Call Reports	171	(1)
Customer Files	171	(1)
Translations	171	(1)
Electronic Documents	172	(1)
Privilege Logs	173	(1)
Limitations Traded for Concessions	174	(1)
Venue	174	(1)
Foreign and Affiliate Offices	174	(1)
Potential Alternatives to Full Compliance	175	(4)
The ``Quick Look'' Procedure	175	(3)
Phased Production	178	(1)
Compiling the Second Request Response	179	(14)
The Logistics of Conducting the Search	179	(1)
Location of Document Review	180	(1)
Controlling Document Collection and Review	181	(1)
Copying and Numbering	181	(1)
Creating the Master List	181	(1)
The Physical Production	182	(5)
The Logistics of Responding to Interrogatories	187	(1)
The Privilege Log	188	(1)
Objections and Noncompliance Statements	189	(1)
Final Preparations for Submission	189	(2)
Second Request Compliance Checklist	191	(2)
Substantial Compliance and Compliance Disputes	193	(11)
The Statutory Framework	194	(3)
Enforcement Agency Procedures for Asserting Noncompliance and Commencing a Compliance Action	197	(1)
Negotiating Resolution to Compliance Disputes	197	(3)
The Appeals Process	200	(1)
FTC Procedures	200	(2)
DOJ Procedure	202	(1)
Litigating Compliance Disputes	202	(2)
What the Agency Staff Is Doing While the Parties Are Compiling the Response	204	(11)
Third-Party Interviews	204	(4)
Preparation of Affidavits/Declarations	208	(1)
CIDs and Subpoenas for Documents	208	(2)
Interviews and Depositions of Party Employees	210	(2)
Confidentiality Undertakings	212	(3)
What Counsel Can Be Doing beyond Compiling the Response	215	(9)
Tracking Staff's Third-Party Efforts	215	(3)
Developing the Affirmative Case	218	(2)
Communications with Agency Staff	220	(4)
After Responding to the Second Request
The Agency's Continuing Investigation	224	(8)
Meetings with the Section Chief or Assistant Director after the Staff Has Recommended Challenge	232	(4)
White Papers	235	(1)
Higher Level Review	236	(11)
At the FTC	236	(6)
At the Antitrust Division	242	(5)
Timing and Extensions	247	(3)
Responses to the Agency's Determination	250	(9)
If the Agency Decides Not to Challenge	251	(1)
If the Agency's Determination Is Adverse	252	(1)
Deferring Action	252	(1)
Settlement Negotiations	252	(2)
Proceeding to Litigation	254	(2)
Abandoning the Transaction	256	(3)
Differences in the Process for Nonreportable Transactions
Introduction	259	(1)
Transactions Not Subject to HSR Notification Requirements	260	(11)
Deciding Whether to Notify the Agencies of a Nonreportable Transaction	262	(2)
Non-HSR Investigations	264	(1)
Non-HSR Investigational Tools	264	(1)
Differences in Timetables	264	(2)
Issuance of Process to the Parties	266	(1)
Antitrust Division	267	(1)
Federal Trade Commission	268	(3)
Agency Review Process	271	(1)
Conclusion	271	(2)
Third-Party Involvement In The Merger Investigation
Representing Parties in Mergers Involving Coordination with Other Government Agencies	273	(15)
Foreign Governments	273	(8)
State Attorneys General	281	(4)
Other U.S. Agencies	285	(3)
Representing Third Parties Who Receive Compulsory Process in Connection with Merger Investigation	288	(7)
The Antitrust Division	291	(2)
The Federal Trade Commission	293	(2)
Representing Third Parties Wishing to Object to a Merger	295	(8)
Resolution Without Litigation
Strategic Considerations in the Timing and Substance of Proposed Resolutions	303	(11)
Considerations Common to Fix-It-First Resolutions and Consent Orders	304	(6)
Considerations Unique to Fix-It-First Resolutions	310	(3)
Resolution Without Litigation at Home and Abroad	313	(1)
Procedures at the FTC	314	(9)
Negotiation of a Proposed Consent Order	314	(1)
Review of a Proposed Consent Order	315	(1)
Placement of the Proposed Consent Agreement on the Public Record for Comment	316	(1)
Acceptance of the Final Consent Order by the Commission	317	(2)
Compliance Procedures	319	(1)
Standard Requirements	319	(3)
Filing Procedures	322	(1)
Confidentiality and Access to Compliance Reports	322	(1)
Generally	322	(1)
Procedures for Requesting Confidential Treatment	322	(1)
Procedures When Respondent Fails to Comply	323	(1)
Procedures at the Department of Justice	323	(13)
Negotiation of a Proposed Consent Decree	323	(1)
Review of a Proposed Consent Decree	324	(1)
The Tunney Act Process	325	(1)
The Tunney Act: A Tool for Disclosure	325	(1)
When the Tunney Act Applies	326	(1)
How the Tunney Act Works	326	(1)
Disclosure of Information by the Government	327	(1)
Public Comment	328	(1)
The Defendant's Role under the Tunney Act	329	(2)
The Court's Role under the Tunney Act	331	(3)
Strategic and Tactical Aspects of the Tunney Act	334	(2)
Typical Provisions of Consent Orders	336
Divestiture	336	(1)
Overview	336	(2)
Differences between DOJ and FTC Consent Orders	338	(4)
Seeking Federal Trade Commission Approval for Divestiture	342	(2)
Seeking Antitrust Division Approval for Divestiture	344	(1)
Hold Separate and Asset Maintenance Requirements	345	(2)
Trustee Provisions	347	(2)
Prior Approval Provisions	349	(2)
Order Termination Provisions	351	(1)
Other Procedural Provisions	351	(1)
Supply Arrangements and Technical Assistance	351
Appendices
Clayton Act Sections 7, 7a, 5, 4	1	(1)
Sherman Act Sections 1, 2, 4	2	(1)
FTC Act Section 5	3	(1)
HSR Notification and Report Form and Instructions	4	(1)
ABA's Guidance for Federal Merger Investigations and Complying with ``Second Requests''	5	(1)
Resolution Revisions to the National Association of Attorneys General Pre-Merger Disclosure Compact	6	(1)
Protocol for Coordination in Merger Investigations between the Federal Enforcement Agencies and State Attorneys General	7	(1)
FTC Organizational Chart/DOJ Organizational Chart	8	(1)
FTC Expertise List by Litigation and Regional Offices	9	(1)
North American Industry Classification System Codes	10	(1)
Sample Waiver Forms	11	(1)
Sample Retention/Confidentiality Agreement for an Economic Consultant	12	(1)
Sample Contractual Provisions Allocating Risk	13	(1)
Sample Joint Defense Agreement	14	(1)
Sample List of Questions to Client for Completion of an HSR Filing	15	(1)
Sample Section 1746 Declaration	16	(1)
FTC/DOJ Clearance Procedure	17	(1)
FTC/DOJ Announcement of Expedited Clearance Procedure	18	(1)
Model Second Request	19	(1)
Second Request Internal Appeal Procedure	20	(1)
FTC/DOJ Announcement on ``Quick Look'' Procedure	21