Mergers

Last summer, the antitrust agencies proposed sweeping changes to the Hart-Scott-Rodino (“HSR”) Act premerger notification form and associated rules. Covered in detail here, the proposed changes would significantly increase the time, burden, and costs on merging parties to prepare an HSR filing. The public comment period ended on September 27, 2023. Since then, the agencies have given little indication what changes would be made in response to the comments or when the proposed rules would be finalized.Continue Reading New HSR Rules Will Be Finalized Within Weeks, According to DOJ Official

What do you need to know?

Following a call for information earlier this year, the UK’s Competition and Markets Authority (CMA) has now announced the changes it intends to make to its merger review process. The majority of the changes are to the Phase 2 process, which is only encountered in a minority of formal

Continue Reading Towards a More Interactive Merger Review Process: UK CMA Proposes Amendments

On November 3, 2023, FTC Chair Lina Khan sent a letter addressed to Representative Thomas P. Tiffany describing the FTC’s merger enforcement program during her tenure at the agency. The letter was a response to an inquiry from seven members of congress for information about the costs associated with certain litigated merger challenges brought by

Continue Reading Recently Published FTC Data Confirm Historically Low Number of Merger Enforcement Actions

On October 17, 2023, the U.S. Government Accountability Office (“GAO”) published a report on mergers and acquisitions (“M&A”) in the defense industrial base. The report details the current M&A review process of the Department of Defense (“DOD”) and provides recommendations to proactively assess M&A competition risks.

Currently, DOD’s Industrial Base Policy (“IBP”) office, with input

Continue Reading GAO Recommends Increased Guidance for DOD Mergers & Acquisitions Review

On July 19, 2023, the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice (collectively, “the Agencies”) issued a new set of merger guidelines in draft form for public comment (the “Draft Guidelines”).  The Draft Guidelines, if adopted, will replace the Horizontal Merger Guidelines issued in 2010 and the Vertical Merger Guidelines issued in 2020 (the latter of which the FTC withdrew in September 2021).  The updates make significant changes to the guidelines, such as:

  • Lowering the thresholds for when the Agencies are likely to presume that horizontal mergers are illegal;
  • Including—for the first time—a presumption of illegality for certain vertical mergers;
  • Adding guidelines focused on serial acquisitions and acquisitions of potential competitors;
  • Introducing concepts related specifically to multi-sided “platforms”; and
  • Explicitly addressing the effects of transactions on labor markets for the first time.

Continue Reading U.S. Antitrust Agencies Propose Major Changes to Merger Guidelines

On June 27, 2023, the U.S. Federal Trade Commission (“FTC”), with the concurrence of the Antitrust Division of the Department of Justice (“DOJ”) (together, “the Agencies”), issued a Notice of Proposed Rulemaking (the “Notice”) that proposes extensive changes to the Hart-Scott-Rodino (“HSR”) Act premerger notification form and associated instructions, as well as to the rules implementing the Act. The proposed changes represent the most significant revisions to the requirements that HSR filing persons must satisfy in the nearly 50 years since the inception of the HSR notification process. Continue Reading FTC and DOJ Propose Sweeping Changes to the HSR Form

On September 29, 2022, the U.S. House of Representatives passed a package of three antitrust bills (H.R. 3843) by a vote of 242-184. The package includes: (1) the Merger Filing Fee Modernization Act; (2) the Foreign Merger Subsidy Disclosure Act; and (3) the State Antitrust Enforcement Venue Act.Continue Reading U.S. House of Representatives Passes Antitrust Legislative Package

On 22 June 2022, the EU’s General Court (“GC”) fully dismissed thyssenkrupp’s appeal against the European Commission’s (“Commission”) decision to block its proposed joint venture (“JV”) with Tata Steel in 2019.

This is the first time that the GC has considered the prohibition of a “gap” case under the EU Merger Regulation (“EUMR”) since it annulled the Commission’s prohibition of CK Hutchison’s proposed acquisition of Telefónica UK (O2) in 2020 (“CK Hutchison”) (see our previous blog post here). A “gap” case is a merger in an oligopolistic market that does not result in the creation or strengthening of an individual or collective dominant position. Rather, it risks causing a “significant impediment to effective competition”.

This result may indicate a return to a more traditional approach by the GC as regards “gap” cases than that demonstrated in the CK Hutchison judgment. The judgment also provides helpful guidance on the interpretation of the EUMR and other legal instruments (such as the Market Definition Notice and the Notice on Remedies). The key findings are:

  • Standard of proof: In order to block a “gap” merger, the Commission must show with a sufficient degree of probability that the transaction significantly impedes effective competition in the internal market or in a substantial part of it.
  • SSNIP test: The Commission is not required to apply the SSNIP (small but significant and non-transitory increase in price) test when assessing substitutability between products — it is only one of the methods available to the Commission when defining the market.
  • Remedies: When assessing remedies, it is not necessary to demonstrate that the remedies remove the entire overlap between the merging parties or re-create fully the pre-merger structure in affected markets.
  • Requests for Information (“RFI”): There is no procedural error where the Commission fails to take additional steps (beyond sending systematic reminders) to ensure that recipients respond to an RFI.

Continue Reading EU General Court Upholds Tata Steel/thyssenkrupp JV Prohibition

When its Anti-Monopoly Law (“AML”) went into effect in August 2008, China immediately became a significant antitrust enforcer on the world stage.  On June 24, 2022, the National People’s Congress, China’s top legislature, passed the Amendment to the Anti-Monopoly Law of the PRC (the “Amendment”), the first significant changes to the AML in nearly fourteen years.  The Amendment, which was signed into law by President Xi Jinping and published on June 24, will become effective on August 1.  It marks a major milestone in antitrust enforcement in China.

The more significant aspects of the Amendment include:

  • significantly enhanced penalties for AML violations, including the introduction of fines for individuals;
  • the introduction of a discretionary “stop-the-clock” mechanism for merger reviews;
  • the codification of a burden-shifting framework created by China’s courts that gives companies the opportunity to defend resale price maintenance agreements; and
  • new safe harbor and burden of proof provisions for matters involving vertical agreements.

Consistent with trends in other jurisdictions around the world, the Amendment also features a special focus on key economic sectors such as the digital economy.

Following the publication of the Amendment, the State Administration for Market Regulation (“SAMR”), China’s lead antitrust enforcement authority, released six sets of draft implementing regulations for public comment.  These cover subjects such as merger control and notification thresholds, anti-competitive agreements, abuse of a dominant market position, and the abuse of intellectual property rights to exclude or restrict competition.  SAMR is accepting comments on these regulations until July 27, 2022.

How Covington Can Help

Covington’s global antitrust and competition practice guides clients through the often-complex web of antitrust and competition laws around the world to help them secure their most important business objectives. Our team, which includes many attorneys who have served in senior leadership roles at government enforcement agencies and in in-house positions, has decades of collective experience advising clients regarding their global antitrust and competition concerns.  If you have any questions concerning the material discussed in this client alert, please contact any of the following members of our Antitrust/Competition practice: Jim O’Connell, James Marshall, and Alexander Wang.

This communication is intended to bring relevant developments to the attention of Covington & Burling LLP’s clients and other interested colleagues. It is not intended as legal advice. Readers should seek specific legal advice before acting with regard to the subjects mentioned herein. Please send an email to unsubscribe@cov.com if you do not wish to receive future emails or electronic alerts.Continue Reading Significant Changes to China’s Anti-Monopoly Law to Take Effect in August

When the UK left the EU on 31 December 2020, the Competition and Markets Authority (“CMA”) gained new powers, functions and responsibilities previously exclusively reserved to the European Commission (the “Commission”).

This blog explores how the CMA has tackled its increased workload in the first year post-Brexit, under the shadow of the global pandemic, and the extent to which the CMA’s practice has diverged from EU law.Continue Reading Trends, developments and divergence from EU law? The CMA’s first year as a global competition authority