Merger Control Survey 2015

Merger Control
Survey 2015

www.iflr.com

Lead contributors Ian Giles and Marc Waha

IFLR
international financial law review

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IFLR
international financial law review

UNITED STATES

US
www.nortonrosefulbright.com

Daniel Wellington and Neely B Agin, Norton Rose Fulbright

1. REGULATORY FRAMEWORK
1.1 What is the applicable legislation and who enforces it?

Merger control in the United States is principally governed by Section 7 of

the Clayton Act and The Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the HSR Act). Section 7 of the Clayton Act sets out
the substantive legal standards, while the HSR Act, and its implementing
rules, provide the procedural framework for pre-closing notification. The
Clayton and HSR Acts are enforced jointly by the Department of Justice
and Federal Trade Commission (DOJ and FTC collectively the Agencies).
1.2 What types of mergers and joint ventures are caught?

2.3 Is filing mandatory or voluntary and must closing be suspended

pending clearance? Are there any sanctions for non-compliance,
and are these applied in practice?

Filing for all transactions that meet the notification thresholds, and do not
qualify for an exemption, is mandatory. The parties may not close the transaction until all applicable waiting periods have expired or have been terminated. Non-compliance with the notification requirements of the HSR Act
can result in substantial civil penalties of up to $16,000 per day (amount
adjusted periodically for inflation).
2.4 Who is responsible for filing and what, if any filing fee applies?
What are the filing requirements and how onerous are they?

The HSR Act requires pre-closing notification for acquisitions of voting securities, non-corporate interests (for instance, partnership and limited liability company interests), and assets that meet the applicable thresholds,
unless otherwise exempt from the Acts requirements. Any acquisition meet- Each of the acquiring and acquired parties to a transaction is required to
ing the thresholds must be notified, including the acquisition of a minority submit an HSR notification and report form. A filing fee based on the purchase price must be submitted to the FTC at the time of filing. The acquirinterest or the establishment of a joint venture.
ing party is responsible for the fee under the HSR Act, although the parties
may agree to allocate some or all responsibility for the fee to the acquired
2. FILING
party. The filing fees for 2015 are: $45,000 for transactions valued at more
2.1 What are the thresholds for notification, how clear are they, and than $76.3 million, but less than $152.5 million; $125,000 for transactions
valued at more than $152.5 million, but less than $762.7 million; $280,000
are there circumstances in which the authorities may investigate a
for transactions valued at $762.7 million or more.
merger falling outside such thresholds?
3. CLEARANCE
All transactions meeting both a size-of-transaction and size-of-persons test 3.1 What is the standard timetable for clearance and is there a fastmust be reported, absent an applicable exemption. The dollar value of these track process? Can the authority extend or delay this process?
thresholds is revised annually based on changes in the US gross national
product. The dollar values listed below are for 2015.
Under the size-of-transaction test, the threshold is met when a buyer acquires, or will hold as a result of an acquisition, voting securities, assets, or
non-corporate interests valued in excess of $76.3 million. If the value of the
transaction is greater than $305.1 million, the transaction is reportable even
where the size-of-persons test is not satisfied.

The standard timetable for clearance is 30 days (15 days for a cash tender
offer) during which closing must be suspended. During this initial waiting
period, the Agencies decide whether competitive concerns warrant a request
for additional documents and information (a so-called second request). If a
second request is issued, the waiting period is extended, and does not expire
until 30 days (10 days for a cash tender offer) after both parties have subUnder the size-of-persons test, the threshold is met if one party to the stantially complied with the request.
transaction has at least $152.5 million in annual sales or total assets and the
other has at least $15.3 million in annual sales or total assets.
The parties may ask the Agencies to terminate the waiting period early
(early termination). A decision by the Agencies to grant early termination
Even where transactions are not required to be notified under the HSR is purely discretionary and is made when the Agencies conclude that the
Act, they may still be challenged by the Agencies.
transactions competitive effects do not merit further study.
2.2 Are there circumstances in which a foreign-to-foreign merger
may require notification, and is a local effect required to give the
authority jurisdiction?

When a foreign person acquires a controlling interest in a foreign entity, the

acquisition may require notification if the target (including subsidiaries) in
the most recent year generated sales in or into the US or has assets located
in the US of more than $76.3 million (amount adjusted annually).

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UNITED STATES

3.2 What is the substantive test for clearance, and to what extent
does the authority consider efficiencies arguments, or noncompetition factors such as industrial policy or the public interest,
in reaching its decisions?

4. RIGHTS OF APPEAL

Under Section 7 of the Clayton Act, acquisitions which substantially lessen

competition or tend to create a monopoly are prohibited. The Agencies
substantive test for clearance is further outlined in the Horizontal Merger
Guidelines, available at: http://www.ftc.gov/sites/default/files/attachments/merger-review/100819hmg.pdf.

Neither agency has the ability unilaterally to prevent the consummation of

a merger or acquisition. If the DOJ or FTC determines that a transaction
violates US antitrust laws, the agency may seek to block the transaction in
federal court (or, for challenges by the FTC, in an administrative proceeding). If either agency succeeds in obtaining an injunction the merging parties
may appeal the decision to the applicable court of appeals.

4.1 Please describe the parties ability to appeal merger control

decisions how successful have such challenges been?

The Agencies will consider efficiency arguments, weighing the benefits

of any anticipated merger-specific efficiencies against potential anti-competitive effects. The applicable statutes do not allow the Agencies to take
non-competition related factors into account.
3.3 Are remedies available to alleviate competition concerns?
Please comment on the authoritys approach to acceptance and
implementation of remedies.

The Agencies have a strong preference for structural remedies (divestitures)

over conduct remedies that require monitoring. In the event that a divestiture is required, the DOJ or FTC will seek to ensure that the purchaser of
the divested asset receives everything needed to become an effective competitor. As such, the divestiture of a complete business unit is generally preferred, and intangible assets necessary for the purchaser to compete also may
be required to be divested.

Daniel Wellington

About the author

Partner, Norton Rose Fulbright

Washington DC, US
T: +1 202 662 4574
E: dan.wellington@nortonrosefulbright.com
W: www.nortonrosefulbright.com

Daniel Wellington is a partner in Norton Rose Fulbrights Washington

DC office and handles antitrust and trade regulation matters, including
representing parties in mergers, acquisitions, and joint ventures before
the US Federal Trade Commission, the US Department of Justice, and
state antitrust enforcement agencies as well as coordinating international
merger control filings. He formerly served in the Federal Trade
Commissions Bureau of Competition.

Neely Agin

About the author

Partner, Norton Rose Fulbright

Neely Agin is a partner in Norton Rose Fulbrights antitrust and

competition group in Washington DC. She regularly represents clients
before the Federal Trade Commission and Department of Justice. Agin
has guided hundreds of transactions in a wide range of industries
through the US and international antitrust merger review process.

Washington DC, US
T: +1 202 662 4723
E: neely.agin@nortonrosefulbright.com
W: www.nortonrosefulbright.com

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IFLR SURVEY | MERGER CONTROL 2015