© hogan & hartson llp. all rights reserved. transatlantic merger enforcement catriona hatton...

© Hogan & Hartson LLP. All rights reserved.

Transatlantic merger enforcement

Catriona HattonNovember 28, 2007

Brussels


EU-US Mergers: which transactions are caught?

EU:

– acquisitions of control (includes acquisitions of minority stakes where they are accompanied by rights giving effective control on strategic decisions)

– turnover thresholds

US:

– 'size of transaction test' (value of the assets, voting shares, or partnership interests to be held following the acquisition)

– 'size of the parties' test (assets and turnover of parties relevant for deals below certain value).

– at least one party engaged in interstate or foreign commerce

US agencies can review mergers below thresholds and reexamine mergers previously cleared


EU US - which 'Agency'?

• Who reviews?– US: DOJ or FTC? No bright line test for who reviews. You may get a 'clearance battle‘

– Potential review by state attorneys general

– EU: European Commission (possibility of referral to national authority)

• Who clears?– US: DOJ or FTC

– EU: European Commission (even when European Courts overturn decision, back to Commission - Sony BMG)

• Who clears subject to remedies?– US: DOJ/FTC consent decrees: - may have criminal and civil penalties for violation

- DOJ consent decrees approved by court

– EU: European Commission

• Who blocks?– US: DOJ/FTC cannot block- must seek injunction by federal court

– EU: European Commission (if European courts overturn, back to Commission - Schneider Legrand)


EU US Timing Considerations

Up front time before filing generally longer EU:

• Nature of the Submission: US HSR Form (provides only minimal information) vs EU Form CO (latter requires extensive competitive analysis).

• Pre filing drafts and discussions with European Commission - in practice mandatory

Formal Review Period after Filing:

• Non complex cases: US 30 calendar day waiting period or early termination vs. EU 25 working days

• Complex cases:

US 30 calendar days + second request (time frame not determined, depends on compliance with second request - typically 3-6 months ) + further 30 -60 days

EU 25 working days +10 working days+90 working days+15 working days (if remedies offered late) + 'optional' 20 working days. Total max: 160 working

days (stop the clock option)


Differences in substantive analysis?

• US Test: will the deal lead to a substantial lessening in competition?

• EU Test: will the deal lead to a significant impediment to effective competition, in particular as a result of the creation or strengthening of a dominant position?

However, despite broad convergence, differences remain.

For example:

– EU more conservative approach to vertical mergers

– EU tying/bundling theories

– EU concern with competitors complaints

– US Government - change in the Administration can influence enforcement policies


Approach to Remedies

• EU and US preference for structural (divestment) remedies

• Sufficient assets to ensure viability of divested business, sold to a buyer that will operate those assets to provide competition equivalent to that being lost as a result of the acquisition

• Upfront buyer/fix-it-first requirements

• Limited scope for behavioural remedies.


EU US Remedies - Timing issues

• EU Time Squeeze

• EU market testing of remedies (US no market testing)

• US more flexibility


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