Merger Remedies Guide - 2nd Edition 06 48 04

MERGER
REMEDIES
GUIDE
SECOND EDITION
Editors
Ronan P Harty and Nathan Kiratzis
© Law Business Research 2019

MERGER
REMEDIES
GUIDE
SECOND EDITION
Editors
Ronan P Harty and Nathan Kiratzis
Reproduced with permission from Law Business Research Ltd

This article was first published in October 2019
For further information please contact Natalie.Clarke@lbresearch.com

Publisher
Clare Bolton
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Published in the United Kingdom by Global Competition Review
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Acknowledgements
The publisher acknowledges and thanks the following contributors for their learned assistance
throughout the preparation of this book:
ANDERSON MŌRI & TOMOTSUNE
AXINN
CLEARY GOTTLIEB STEEN & HAMILTON LLP
COMISIÓN NACIONAL DE DEFENSA DE LA COMPETENCIA
COMPASS LEXECON
CRAVATH, SWAINE & MOORE LLP
CROWELL & MORING LLP
DANIEL P DUCORE
DAVIS POLK & WARDWELL LLP
DIANA L MOSS/AMERICAN ANTITRUST INSTITUTE
MCCARTHY TÉTRAULT LLP
MATTOS FILHO, VEIGA FILHO, MARREY JR

E QUIROGA ADVOGADOS
MAZARS
PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP
SHARDUL AMARCHAND MANGALDAS & CO
SHEARMAN & STERLING LLP
SULLIVAN & CROMWELL LLP
i
VON WOBESER Y SIERRA, SC
WACHTELL, LIPTON, ROSEN & KATZ
WEIL, GOTSHAL & MANGES LLP
ZHONG LUN LAW FIRM
ii
Contents
1 Overview�� 1
Ronan P Harty, Nathan Kiratzis and Anna M Kozlowski
Part I: Overarching Principles and Considerations

2 Key Principles of Merger Remedies��15
Ilene Knable Gotts
3 Economic Analysis of Merger Remedies��24

Mary Coleman and David Weiskopf
4 Realigning Merger Remedies with the Goals of Antitrust��35

Diana L Moss
Part II: Types of Remedies

5 Structural Remedies�� 49
Charles F (Rick) Rule, Andrew J Forman and Daniel J Howley
6 Non-Structural Remedies�� 58
Carrie C Mahan and Natalie M Hayes
7 Antitrust Remedies in Highly Regulated Industries��70

Christine A Varney, Julie A North, Margaret Segall D’Amico and Molly M Jamison
iii
Contents
Part III: Process and Implementation

8 Managing Timing of Multi-Jurisdictional Review�� 85
John Harkrider and Michael O’Mara
9 Identifying a Suitable Divestiture Buyer and Related Issues��93

Steven L Holley and Dustin F Guzior
10 Giving Effect to the Remedy�� 110

David Higbee, Djordje Petkoski, Geert Goeteyn, Sara Ashall, Özlem Fidanboylu,
Caroline Préel and John Skinner
Part IV: Compliance

11 A Practical Perspective on Monitoring�� 127
Justin Menezes
12 Enforcement of Merger Consent Decrees��138

Juan A Arteaga
Part V: Remedy Negotiations: Practical Considerations

13 Negotiating Remedies: A Perspective from the Agencies�� 157
Daniel P Ducore
14 Negotiating the Remedy: A Practitioner’s Perspective��168

Francisco Enrique González-Díaz, Daniel P Culley and Julia Blanco
iv
Contents
Part VI: Merger Remedies Insights from around the Globe

15 Argentina�� 181
Pablo Trevisán
16 Brazil��190
Marcio Soares, Renata Zuccolo and Paula Camara
17 Canada��201
Jason Gudofsky, Debbie Salzberger and Kate McNeece
18 China��216
Yi Xue (Josh)
19 India��225
John Handoll, Shweta Shroff Chopra and Aparna Mehra
20 Japan�� 243
Vassili Moussis, Yoshiharu Usuki and Kiyoko Yagami
21 Mexico��255
Fernando Carreño and Paloma Alcantara
About the Authors�� 265

Contributors’ Contact Details��281
v
01
Overview
Ronan P Harty, Nathan Kiratzis and Anna M Kozlowski1
A feature common among almost all jurisdictions that have antitrust laws is a set of rules that
govern mergers. Although the details of these rules may differ, a unifying theme is that mergers
should not reduce competition in a properly defined market.
The assessment of the competitive effects of any given transaction is not a binary exercise.
Ultimately, the assessment of the impact of the transaction turns on an informed, but prospec-
tive, review of the relevant market and the competitive conditions in that market. Often, anti-
trust authorities will agree to remedy the prospective harm that may result from a transaction
by accepting undertakings or commitments from the parties to do particular things or act in
a particular way. At this point, an additional level of ‘crystal ball gazing’ is introduced into the
merger review process. The antitrust authority needs to determine an appropriate means of
addressing the prospective harm arising from the merger, otherwise known as a merger remedy.
This book provides a comprehensive review of a variety of issues relating to the design
and implementation of merger remedies, often referring to practices and precedents from the
United States and the European Union. However, as noted above, merger rules are global in
nature and, therefore, a part of the book is devoted to a review of other jurisdictions around the
world, including Canada, China and Mexico.
This chapter provides a detailed overview of each of the parts that make up this book. At
the outset, however, we provide an overview of four retrospective studies of merger remedies
that have been conducted by antitrust authorities in the United States, the European Union, the
United Kingdom and Canada. These studies provide a useful introduction to some of the key
issues that will be covered in greater detail throughout the book. They also serve as a means of
understanding the effectiveness of merger remedies negotiated in the past.
1 Ronan P Harty is a partner, and Nathan Kiratzis and Anna M Kozlowski are associates, at Davis Polk &
Wardwell LLP.

Overview
The US Federal Trade Commission’s 2017 Report

The first retrospective study considered is the US Federal Trade Commission (FTC) Report
released in January 2017.2 The FTC Report examined 89 merger orders issued by the FTC from
2006 through 2012. Among these 89 orders, 76 imposed structural remedies. Five merger orders
required a mix of structural and what can be termed non-structural or behavioural remedies.3
Another six orders ‘required only non-structural relief’, and two others ‘required relief other
than divestiture that was designed to facilitate entry’.4 While structural remedies require
some form of structural change on the part of the merger parties (e.g., divestment of assets),
non-structural or behavioural remedies are designed to regulate the future conduct of the
merger parties (e.g., regulating the prices that may be charged in the future). Structural rem-
edies are discussed in more detail in Chapter 5 and non-structural remedies are discussed in
Chapter 6.
The FTC analysed 50 of the 89 merger orders by conducting interviews with transaction
parties, other significant market participants and buyers of divestiture assets, where applica-
ble. The FTC then corroborated that information with market share information derived from
sales data obtained from significant competitors.5 Of the 50 merger orders analysed, 46 related
to horizontal mergers (40 involved structural remedies and six involved non-structural rem-
edies) and four related to vertical mergers (all non-structural remedies). The FTC ultimately
concluded that 69 per cent of the 50 merger orders studied were ‘a success’, meaning that com-
petition in the relevant market remained at its pre-merger level or returned to that level within
a short time (two to three years) after the FTC issued the order.6 Another 14 per cent were found
to have been ‘a qualified success’, meaning that it took more than two or three years to restore
competition to its pre-merger state, but the remedy ultimately did so.7 The remaining 17 per
cent were rated ‘a failure’, meaning that the remedy did not maintain or restore competition in
the relevant market.
The FTC Report also considered the timing of the implementation of a remedy on its ulti-
mate success. The FTC concluded that of the 40 horizontal mergers where structural remedies
were imposed, success, as defined by the FTC, was far more likely in situations where the rem-
edy was implemented before the merger was consummated (75 per cent) versus situations
where the merger had already been consummated (26 per cent).8
2 FTC, The FTC’s Merger Remedies 2006–2012: A Report of the Bureaus of Competition and Economics
(2017) (the FTC Report), available at www.ftc.gov/system/files/documents/reports/ftcs-merger-
remedies-2006-2012-report-bureaus-competition-economics/p143100_ftc_merger_remedies_2006-2012.
pdf. Notably, as part of its hearings initiative during the autumn of 2018 through the spring of 2019, the
FTC held a hearing on merger retrospectives, which focused on lessons learned from retrospective
studies, how such studies can improve prospective merger analysis, and how the FTC’s retrospective
programme should look over the next decade. See Transcript, FTC, Competition and Consumer
Protection in the 21st Century: Merger Retrospectives (12 April 2019), available at www.ftc.gov/system/
files/documents/public_events/1466002/ftc_hearings_session_13_transcript_4-12-19.pdf.
3 The terms non-structural remedy and behavioural remedy are synonymous and are used
interchangeably throughout this chapter.
4 Id. at 7.
5 Id. at 11.
6 Id. at 15 and 18.
7 Id.
8 Id. at 18 and 19.

Overview
Another issue considered by the FTC Report was the effectiveness of structural remedies
requiring the divestiture of ongoing businesses as opposed to divestitures of a defined set of
assets. The FTC found that all divestitures of ongoing businesses that were studied were suc-
cessful, irrespective of whether they involved an upfront buyer or a post-order buyer.9 An
‘upfront buyer’ is an identified buyer that the merger parties negotiate, finalise and execute a
purchase agreement and all ancillary agreements with before the proposed order is accepted
by the antitrust authority. On the other hand, a ‘post-order buyer’ refers to a situation where
the parties agree to divest certain assets to a buyer approved by the antitrust authority within a
certain time period after the authority issues a final merger remedy order. While the FTC found
that all divestitures of an ongoing business that were reviewed were successful, as defined by
the FTC, the divestitures of selected assets were successful or a qualified success in 56 per cent
and 11 per cent of cases respectively. The FTC found that the other 33 per cent of orders involv-
ing divestitures of selected assets did not maintain or restore competition in the relevant mar-
kets.10 The issues associated with divestiture, as well as the difficulties associated with defining
an asset package that will be sufficient to restore competition, are dealt with in Chapters 5, 10,
13 and 14.
The FTC Report also provided useful insights regarding the success of a remedy based on a
survey of the buyers of divestiture assets. In relation to 15 of the 89 remedies that involved dives-
titure, the FTC conducted surveys of each of the 43 divestiture buyers.11 Based on the partici-
pants’ responses and a survey of publicly available market data, the FTC concluded that 39 out
of the 43 buyers continued to function and provide competition in the relevant markets.12 The
importance of selecting a suitable buyer in the context of a merger remedy is discussed in detail
in Chapter 9.
The UK Competition and Markets Authority 2017 Report

Another recent retrospective study of merger remedies was conducted by the United Kingdom
Competition and Markets Authority (CMA).13 As with the FTC Report, the CMA relied principally
on interviews with market participants to evaluate the effectiveness of the merger remedy.14
However, in contrast to the FTC Report, the CMA Report evaluated the effectiveness of 15 past
merger remedies rather than surveying all remedies within a particular period.15
The CMA Report provided commentary on three matters that involved the use of price con-
trols, a particular type of non-structural remedy. As discussed in further detail in this book,
non-structural remedies are challenging to develop and implement. As the three cases regard-
ing price controls that were surveyed by the CMA demonstrate, non-structural remedies can
sometimes have unintended consequences and, therefore, varying levels of success in address-
ing anticompetitive effects.
9 Id. at 21.
10 Id. at 22.
11 Id. at 29.
12 Id.
13 Competition and Markets Authority, Understanding Past Merger Remedies (2017) (the CMA Report),
available at www.gov.uk/government/uploads/system/uploads/attachment_data/file/606680/
understanding_past_merger_remedies_April_2017.pdf.
14 Id. at 9.
15 Id.

Overview
In the first matter, Alanod Aluminum-Veredlung GmbH & Co (Alanod) acquired Metalloxyd
Ano-Coil Ltd in 1999, giving it a 75 per cent share in the United Kingdom market for anodised
aluminium coils used in lighting.16 Concerned about this dominance, the CMA’s predecessors,
the Competition Commission (CC) and the Office of Fair Trading (OFT), implemented several
non-structural remedies, including a maximum price control.17 Broadly, the price control was
unnecessary because market prices never approached the price control’s limit.18 In light of
these findings, the CMA concluded that ‘[i]t can be difficult to control prices in industries where
input costs are subject to major changes’.19
In the second matter, Coloplast A/S (Coloplast) acquired SSL International plc in 2002, rais-
ing Coloplast’s market share in the United Kingdom for intermittent catheters to 26 per cent;
for urobags to 58 per cent; and for medical sheaths to 92 per cent.20 The CC and OFT imposed
non-structural remedies, including a price control.21 The price control was effective in lowering
prices to consumers. Surprisingly, although this price control was publicised, Coloplast’s com-
petitors maintained their prices at pre-merger levels (which were higher than Coloplast’s new
price control) and Coloplast’s market share increased. In light of this, the CMA Report expressed
concern that ‘price controls might force firms that are unable to compete with the controlled
price out of the market or deter entry.’22
The third matter imposing a price control was the 2003 acquisition by Draeger Medical AG
& Co KGaA (Draeger) of the Air-Shields business owned by Hillenbrand Industries.23 Draeger
and Air-Shields both supplied ‘neonatal warming therapy products’ to hospitals in the United
Kingdom, and the combined UK market share was estimated to be somewhere between 60 and
100 per cent. The CC and OFT implemented a two-pronged merger remedy to cure anticompeti-
tive concerns arising out of this merger. First, the CC and OFT recommended that the NHS (the
primary purchaser of healthcare products in the United Kingdom) establish maximum prices
and otherwise facilitate new entrants into this market. Second, Draeger had to agree to lock in
its pre-merger prices for a fixed amount of time after the merger. The CMA Report concluded
that the price control remedy acted as a ‘safety net’ to prevent Draeger using its market power to
raise prices for neonatal warming therapy products.24
A year after the retrospective study, the CMA acknowledged these disadvantages of price
controls in a guide to merger remedies, which sets forth the regulator’s approach to rem-
edies in Phase 1 and 2 merger investigations.25 In this guide, the CMA refers to its preference
16 Id. at 52.
17 Id. at 56.
18 Id. Note that for one specific anodised aluminium product for which Alanod had no real competitor, the
price control was a ‘biting constraint’, because Alanod likely had the market power to raise prices above
the control’s upper limit.
19 Id. at 57.
20 Id. at 63.
21 A second behavioural remedy was an agreement from Coloplast not to renew an exclusivity agreement
with a US distributor of non-latex sheaths.
22 Id. at 69.
23 Id. at 76.
24 Id. at 88.
25 Competition and Markets Authority, Merger Remedies (2018), available at https://assets.publishing.
service.gov.uk/government/uploads/system/uploads/attachment_data/file/764372/Merger_remedies_
guidance.pdf.

Overview
for structural remedies, but explains that behavioural remedies may be necessary at times.26
Behavioural remedies, in turn, may take one of two forms, namely, they may be ‘enabling’ or
‘controlling’. Between these two forms, the CMA prefers enabling measures, that ‘work with the
grain of competition,’27 over controlling measures that seek to ‘prevent the merger parties from
exercising the enhanced market power that they are likely to acquire from a merger.’28 Price
controls, such as those described above, fall within the latter category and suffer from numer-
ous disadvantages.29 When implementing price controls, for example, the CMA risks setting
price caps at an inappropriate level, especially where the market is characterised by volatile
pricing, individually negotiated pricing, and differentiated or changing products or services.30
Furthermore, the CMA explains that price controls may deter entry or discourage innovation in
the market.31 As a result, the CMA states that it will only use non-structural ‘control measures’
where other remedies are not feasible or appropriate, and will likely require them on ‘tempo-
rary basis’ only.32
The Canadian Competition Bureau’s 2011 Report

A third retrospective study was conducted by the Canadian Competition Bureau in 2011.33 The
report studied the effectiveness of 23 merger remedies obtained by the Competition Bureau
between 1995 and 2005. As with the FTC Report, the Competition Bureau’s Report relied princi-
pally on interviews with merged entities and market participants.34
In sum, 16 out of the 20 structural remedies obtained by the Competition Bureau were char-
acterised in the report as successful ‘in achieving their objective of eliminating the substantial
lessening or prevention of competition’ after the merger.35 The other four structural remedies
were either never fulfilled (i.e., the assets subject to the divestiture requirement were never sold
to a third party)36 or the divested businesses were ‘no longer operating’.37 Consistent with the
findings in the FTC Report, the Competition Bureau also observed that divestiture tended to be
more successful where the divested asset was a ‘stand-alone operating business, as opposed to
components of a business’.38 Moreover, even where the divestiture involved only components of
a business, there was greater success when the purchaser already possessed the ‘infrastructure
and expertise in the relevant product line’.39
26 Id. at 17.
27 Id. at 18 (internal quotation marks omitted).
28 Id. at 59–60.
29 Id. at 60.
30 Id.
31 Id.
32 Id. at 60–61.
33 Competition Bureau, Merger Remedies Study (2011), available at www.competitionbureau.gc.ca/eic/
site/cb-bc.nsf/vwapj/cb-merger-remedy-study-summary-e.pdf/$FILE/cb-merger-remedy-study-
summary-e.pdf.
34 Id. at 2.
35 Id.
36 Id.
37 Id. at 5.
38 Id.
39 Id.

Overview
The European Commission’s Directorate-General for Competition’s 2005

Report
The final retrospective study profiled in this chapter is the Directorate-General for Competition’s
(DG Comp) review of merger remedies, which was published in 2005.40 This review analysed a
sample of 40 merger decisions adopted by the European Commission from 1996 to 2000, which
accounted for 44 per cent of all merger decisions involving remedies during that period. While
the 40 decisions involved 130 remedies, the report only studied 96 remedies for which sufficient
data was available.41
Of the 96 remedies studied there were 84 structural remedies and 12 non-structural rem-
edies, of which 10 were access remedies and two were commitment remedies.42 DG Comp clas-
sified each of the merger remedies as ‘effective’, ‘partially effective’, ‘ineffective’ or ‘unclear’.43
Overall, the DG Comp Report found that 57 per cent of the 96 remedies studied were effective,
24 per cent were partially effective, 7 per cent were ineffective and 12 per cent were unclear.44
Finally, DG Comp also observed that remedies imposed during its initial Phase I review
period were more effective than remedies imposed during the subsequent Phase II review
period.45 The report speculated that this disparity was likely explained by the fact that Phase
II investigations generally involve more complicated merger cases with more significant anti-
trust concerns.46
The GCR Merger Remedies Guide

The retrospective reviews conducted by antitrust authorities in the United States, United
Kingdom, Canada and the European Union demonstrate a recognition that developing and
implementing merger remedies that address anticompetitive concerns can be a very challeng-
ing exercise. This book will provide comprehensive coverage of a number of key aspects relating
to merger remedy practice, from the underlying principles, through to the design and negotia-
tion of the remedy, followed by discussion of issues relating to implementation and compli-
ance. Insights from different jurisdictions across the globe, set out in Part VI, provide a useful
and practical supplement to the topics covered in Parts I to V.
Part I is made up of a series of chapters that introduce a number of overarching principles
and considerations relating to merger remedies.
40 DG Comp, Merger Remedies Study (2005), available at http://ec.europa.eu/competition/mergers/

legislation/remedies_study.pdf.
41 Id. at 12.
42 Id. at 20.
43 A remedy was effective if it ‘clearly achieved [its] competition objective’; partially effective if it had
‘design and implementation issues which were not fully resolved three to five years after the divestiture
and which may have partially affected the competitiveness of the divested business’; ineffective if it
‘failed to restore competition as foreseen in the Commission’s conditional clearance decision’; and
unclear if the DG ‘could not determine whether the remedy had achieved its stated objective’. Id. at 132.
44 Id. at 133.
45 Id. at 135–36. Phase I refers to the automatic 25-day period that the EC has to review a merger subject to
the notification requirements under European competition law. Phase II, similar to a ‘second request’
under the Hart-Scott-Rodino Act in the United States, refers to the longer investigation period that
follows Phase I if the EC has significant concerns concerning the merger.
46 Id. at 136.

Overview
Before designing merger remedies, it is critical to understand the key principles involved
and the goals that any given remedy is designed to achieve. The core universal goal of all rem-
edies is the preservation of competition that would otherwise be lost as a result of a proposed
transaction. Other underlying principles are the need for a tailored remedy, the duration of the
remedy, the practicality of the remedy and the various risks associated with the remedy (e.g.,
sufficiency of the asset package and associated remedies, suitability of the proposed purchaser
and difficulties associated with implementation). While the underlying principles remain the
same, their application may differ depending on whether the merger under consideration is
a horizontal merger (i.e., between two or more parties at the same functional level), a vertical
merger (i.e., between two or more parties at different functional levels), a mixed horizontal and
vertical merger, or a conglomerate merger (i.e., between two or more parties in adjacent mar-
kets). In addition, there may be differences that arise in the application of the underlying princi-
ples depending on the industry or market in which the alleged anticompetitive merger occurs.
These issues are the subject of Chapter 2.
Before embarking on a process of remedy design it is also important to understand the
underlying economic considerations. The merger parties and the antitrust authority are driven
by differing incentives, including in relation to the identity of the proposed divestiture buyer
and the scope of the asset package. In addition, remedies will be utilised where a transaction is
not so clearly anticompetitive that the antitrust authority determines that it should be blocked
outright. Therefore, when designing remedies there is an important trade-off between restoring
competition that may be lost as a result of a proposed transaction and preserving the efficien-
cies that may result from the transaction. The economic considerations relating to merger rem-
edies are covered in Chapter 3.
Ultimately, antitrust laws are directed towards protecting competition and promoting con-
sumer welfare. Therefore, it is vital to understand consumer considerations in the context of
remedy design. This issue is dealt with in Chapter 4. Poor remedy design has the potential to
adversely impact consumers.
Part II moves on to look at specific types of remedies.
As noted above, merger remedies can, as a general matter, be divided into two types – struc-
tural and behavioural. As discussed more fully throughout this book, antitrust authorities have
a preference for structural remedies. In early 2018, the US Assistant Attorney General for the
Antitrust Division, Makan Delrahim, stated that the use of consent decrees should be ‘consist-
ent with a view of the Antitrust Division as a law enforcement agency, not a regulatory one’.47
Later that year, Delrahim announced that the Antitrust Division had withdrawn its 2011 Policy
Guide to Merger Remedies in favour of the 2004 Policy Guide,48 which states that ‘conduct
remedies generally are not favored in merger cases because they tend to entangle the Division
and the courts in the operation of a market on an ongoing basis and impose direct, frequently
47 DOJ, ‘Remarks of Assistant Attorney General Makan Delrahim Delivered at the New York State Bar
Association’ (28 January 2018), available at www.justice.gov/opa/speech/remarks-assistant-attorney-
general-makan-delrahim-delivered-new-york-state-bar.
48 DOJ, ‘Assistant Attorney General Makan Delrahim Delivers Remarks at the 2018 Global Antitrust
Enforcement Symposium’ (25 September 2018), available at https://www.justice.gov/opa/speech/
assistant-attorney-general-makan-delrahim-delivers-remarks-2018-global-antitrust.

Overview
substantial, costs upon the government and public that structural remedies can avoid.’49 In late
May 2018, the US Department of Justice (DOJ) announced the largest-ever US antitrust dives-
titure (at approximately US$9 billion) in relation to Bayer’s acquisition of Monsanto. The rem-
edy in Bayer/Monsanto provides an example of the agency’s preference for structural remedies,
even in instances where vertical concerns are being addressed.50
Divestiture is the key form of structural remedy. A critical issue to consider will be the scope
of any divestiture that forms part of a merger remedy. For example, will the parties be required
to divest a stand-alone business or an asset package? As the FTC and the Canadian Competition
Bureau found in retrospective studies reviewed earlier in this chapter, divestitures of ongoing
businesses were found to be more effective in contrast to divestitures of an asset package. If
an asset package is to be divested, however, what should this package include in order to pre-
serve competition? In 2018, the US Deputy Assistant Attorney General for the Antitrust Division
described some of the risks associated with asset carveouts and described this form of divesti-
ture as ‘inherently suspect’.51 Further, in describing the top three challenges facing the FTC as
part of his confirmation process, Chairman Joseph Simons stated that federal antitrust agen-
cies have been too permissive in dealing with mergers and acquisitions. He specifically noted
that the failure rate of asset carveouts identified in the FTC Report (discussed above) was ‘too
high and need[ed] to be lowered substantially or, ideally, zeroed out altogether’.52 Another con-
sideration associated with divestiture is whether the merging parties should identify the ulti-
mate buyer of assets upfront or post-order. The FTC staff, for instance, recently made clear its
strong preference for upfront buyers, as they ‘minimize the risks that acquired assets will lose
value’, for example, due to a loss of employees, customers, or opportunities, or that ‘competition
will be diminished while ownership of the assets remains uncertain.’53 In addition to divesti-
ture, there are a number of alternative and often useful forms of structural remedy, including
licensing and asset swap arrangements, that can be used. Chapter 5 addresses issues relating to
divestiture and other structural remedies more fully.
While antitrust authorities repeatedly emphasise a preference for structural merger reme-
dies, the fact remains that behavioural non-structural remedies can be beneficial in certain cir-
cumstances. Bruce Hoffman, current Director of the Bureau of Competition, explained in early
2018 that the ‘FTC prefers structural remedies to structural problems,’ but that behavioural
49 DOJ, Antitrust Division Policy Guide to Merger Remedies 17-18 (2004), available at www.justice.gov/
sites/default/files/atr/legacy/2011/06/16/205108.pdf.
50 DOJ, ‘Justice Department Secures Largest Negotiated Merger Divestiture Ever to Preserve Competition
Threatened by Bayer’s Acquisition of Monsanto’ (29 May 2018), available at www.justice.gov/opa/pr/
justice-department-secures-largest-merger-divestiture-ever-preserve-competition-threatened.
51 DOJ, ‘Deputy Assistant Attorney General Barry Nigro Delivers Remarks at the Annual Antitrust
Law Leaders Forum in Miami, Florida’ (2 February 2018), available at www.justice.gov/opa/speech/
deputy-assistant-attorney-general-barry-nigro-delivers-remarks-annual-antitrust-law.
52 Statement on Biographical and Financial Information of Joseph J Simons, dated 31 January 2018,
submitted to the US Senate Committee on Commerce, Science, and Transportation, available at www.
commerce.senate.gov/public/_cache/files/6c4149af-3023-4825-90f1-3c38e279fd0d/6A0CCF409AF89DC8
D5C0A84CE8730012.confidential---simons---committee-questionnaire-redacted.pdf.
53 Ian Connor, ‘The Uphill Case for a Post-Order Divestiture’, Fed. Trade Comm’n (21 March 2019), available
at www.ftc.gov/newsevents/blogs/competition-matters/2019/03/uphill-case-post-order-divestiture.

Overview
remedies ‘can prevent competitive harm while allowing the benefits of integration.’54 As an
example, in January 2019, the FTC cleared the merger of Staples Inc and Essendant Inc pursu-
ant to Staples’ commitment to establish a firewall separating its business-to-business sales
operations from Essendant’s wholesale business, a remedy that would restrict Staples’ access
to the commercially sensitive information of Essendant’s customers.55 Furthermore, courts
may impose behavioural remedies despite US antitrust regulators’ preference for structural
remedies. In Steves & Sons, Inc. v. Jeld-Wen, Inc., a private antitrust litigation, the District
Court for the Eastern District of Virginia required defendant Jeld-Wen, Inc to both divest itself
of an earlier acquired facility and to abide by a number of behavioural remedies.56 The court
imposed the non-structural remedies even though the United States filed a statement of inter-
est ‘express[ing] its strong policy preference for structural relief.’57
Importantly, when partnered with structural remedies, non-structural remedies can
‘fine-tune the remedy’ and restore any competition that may be lost if only a structural rem-
edy were utilised. Obviously, the risk of ‘over-remedying’ is also present. In addition, practical
issues can arise given the difficulties associated with regulating compliance with and enforcing
breaches of non-structural remedies. Chapter 6 looks at various types of non-structural rem-
edies, including those that are focused on conduct within the merged entity and others that
are focused on how the merged entity deals with customers and others in the industry mov-
ing forward.
Finally, Part II looks at the important issue of merger remedies in regulated industries.
In many circumstances, parties to a transaction are subject to a dual review model, meaning
the transaction is scrutinised by the antitrust agencies applying the general merger review
framework as well as assessment by an industry-specific agency that administers a regulatory
regime. As an example, the pending T-Mobile/Sprint deal involved scrutiny by both the DOJ
and the Federal Communications Commission.58 Using the telecommunications, banking and
energy sectors as a point of reference, Chapter 7 explores some of the challenges and benefits
that a dual review system can create when remedies are being framed. Ultimately, merger rem-
edies should not go further than they need to in order to address the competitive harm posed
by a transaction.
In the vast majority of cases, the design and selection of remedies will be informed by pro-
cess and implementation considerations. Part III covers these issues in detail.
54 D. Bruce Hoffman, FTC, ‘Remarks at Credit Suisse 2018 Washington Perspectives Conference’ at 7-8
(10 January 2018), available at www.ftc.gov/system/files/documents/public_statements/1304213/
hoffman_vertical_merger_speech_final.pdf.
55 FTC, ‘FTC Imposes Conditions on Staples’ Acquisition of Office Supply Wholesaler Essendant Inc.’
(28 January 2019), available at www.ftc.gov/news-events/press-releases/2019/01/ftc-
imposes-conditions-staples-acquisition-office-supply.
56 See Steves & Sons, Inc. v. JELD-WEN, Inc., 345 F. Supp. 3d 614 (E.D. Va. 2018), appeal docketed, No. 19-1397
(4th Cir. 16 April 2019).
57 Steves & Sons, Inc., No. 3:16-cv-00545-REP, at 1 (E.D. Va. 6 June 2018), ECF 1640.
58 See, e.g., DOJ, ‘Justice Department Settles with T-Mobile and Sprint in Their Proposed Merger by
Requiring a Package of Divestitures to Dish’ (26 July 2019), available at www.justice.gov/opa/pr/
justice-department-settles-t-mobile-and-sprint-their-proposed-merger-requiring-package; In the
Matter of Applications of T-Mobile US, Inc. and Sprint Corporation Consolidated Applications for Consent
to Transfer Control of Licenses and Authorizations, WT Docket No. 18-197, available at www.fcc.gov/
transaction/t-mobile-sprint.

Overview
A fundamental process consideration, particularly in the context of multi-jurisdictional

merger reviews, is timing. This is the subject of Chapter 8. In circumstances where parties
anticipate that remedies may be required, it will be important to consider an appropriate out-
side or long-stop date in the transaction agreement. Further, the parties should give careful
thought to review timing and sequencing of merger filings, particularly where remedy negotia-
tions are expected.
Related to the timing considerations is the process for identifying and approving suitable
buyers. A well-designed structural remedy will only be effective if the beneficiary of the assets
is able to use them in a way that maintains or enhances competition. For example, will the pro-
posed buyer possess the competitive and financial viability, as well as the operational expertise
to run the divestiture business? Recent views expressed by some FTC commissioners highlight
these issues. In a recent FTC hearing, Commissioner Rohit Chopra raised the issue of divesti-
ture buyers ‘loaded with debt’, observing that heavy debt loads could make it ‘harder – or even
impossible – to compete.’59 Similarly, in a statement regarding the merger of Praxair, Inc. and
Linde AG, Chopra observed that the FTC should carefully scrutinise private equity funds before
approving them as divestiture buyers, as they are ‘associated with . . . firm behaviour that can
reduce long-term competition, including opportunistic asset sales’.60 These considerations may
be further complicated in instances where the divestiture involves highly regulated industries
or industries with a strong focus on R&D. Furthermore, will the sale of the divestiture assets
to the proposed buyer have the effect of creating new competition concerns? Chapter 9 deals
with these issues, as well as the transaction mechanics and timing relating to suitable buyers,
in further detail.
Matters relating to the implementation of the remedy are the subject of Chapter 10. While
the underlying rationale for a particular merger remedy may be easy to describe at a high level,
converting this into a written consent decree or regulatory instrument can be a challenging
exercise for the antitrust authority. There is an information asymmetry between the antitrust
authority and the parties. The authority will rely on the parties to provide sufficient informa-
tion regarding the proposed buyer and the divestiture business to allow it to craft the remedy.
In addition, the parties will need to draft commercial agreements for the disposal of the divesti-
ture assets to the approved buyer, which are consistent with and give effect to the remedy nego-
tiated with the antitrust authority. These drafting exercises are often complicated because of
their substance but also because of the fact that their negotiation involves a number of stake-
holders with differing motivations.
Merger parties should also keep in mind that remedies negotiated with certain antitrust
regulators may not receive approval by other government authorities or by the courts. With
respect to the pending T-Mobile/Sprint transaction, for example, the merger parties were sued
59 FTC, ‘Prepared Remarks of Rohit Chopra: Hearings on Consumer Protection and Competition’ at 3
(6 December 2018), available at www.ftc.gov/system/files/documents/public_statements/1432481/
remarks_of_commissioner_chopra_at_ftc_hearing_on_corporate_governance.pdf.
60 Statement of Comm’r Rohit Chopra, In re Linde AG, Praxair, Inc., and Linde PLC, File No.
1710086 at 2–3 (22 October 2018), available at www.ftc.gov/system/files/documents/public_
statements/1416947/1710068_praxair_linde_rc_statement.pdf.
10

Overview
by the attorneys general of in over one-third of the states despite entering into a settlement with
the DOJ that required them to sell assets and enter into agreements aimed at establishing Dish
Network as a fourth nationwide wireless carrier.61
Part IV reviews issues relating to compliance and enforcement. Where parties do not
comply with the terms of a regulatory instrument or agreement, the effectiveness of a merger
remedy may be curtailed. For these reasons, antitrust authorities often incorporate monitor-
ing, compliance reporting and inspection requirements into the merger remedy order. While
compliance and monitoring are fundamental elements of an effective merger remedy regime,
it also results in ongoing costs for the parties and the antitrust authority. Chapter 11 provides
practical insights from a practitioner who regularly serves as a compliance monitor. In par-
ticular, the chapter addresses challenges arising during the sale process as well as common
hurdles encountered when implementing and monitoring asset maintenance, hold separate
and ring-fencing obligations. Chapter 12 then addresses matters relating to compliance, includ-
ing common provisions that are included in consent decrees. The chapter goes on to discuss
the enforcement mechanisms available where parties do not comply with their obligations.
Further, it provides an overview of some of the provisions that the DOJ has started including in
consent decrees in order to increase the parties’ incentive to comply. These include lowering the
standard for violations to a ‘preponderance of the evidence’ and also requiring the parties to pay
the DOJ’s investigatory and litigation costs in the event of a successful enforcement action.62
The substance of Parts I to IV demonstrates that the area of merger remedies is compli-
cated and there is no one-size-fits-all methodology for addressing anticompetitive concerns.
Therefore, first-hand perspectives from an antitrust authority and private practice provide
a useful lens through which to look at practical considerations when negotiating merger
remedies. Part V provides these different perspectives. In Chapter 13, the former head of the
Compliance Division of the FTC’s Bureau of Competition gives insights regarding the buyer
approval process and mechanisms for ensuring expedited consideration of a proposed remedy
by an antitrust authority. In Chapter 14, a practitioner outlines strategies for engaging with the
antitrust authority in relation to a merger remedy, including tips for presenting the divestiture
package and proposed purchaser to the antitrust authority.
While many aspects of merger remedy practice are common around the world, Part VI pro-
files some of the unique issues in Argentina (Chapter 15), Brazil (Chapter 16), Canada (Chapter 17),
China (Chapter 18), India (Chapter 19), Japan (Chapter 20) and Mexico (Chapter 21). The relevance
of these chapters is not limited to practitioners within each of the countries covered. Rather, the
insights will be particularly useful for practitioners coordinating a multi-jurisdictional trans-
action that may raise antitrust issues in one or more of the countries covered in Part VI.
Part VI, as well as a number of other chapters in this book, touch on various issues that
are unique to the negotiation of remedies in the context of multi-jurisdictional mergers. For
example, when should the parties engage in discussions regarding remedies with various
61 See New York AG, ‘AG James: Pennsylvania Addition to T-Mobile/Sprint Lawsuit Keeps States’
Momentum Moving Forward’ (18 September 2019), available at https://ag.ny.gov/press-release/2019/
ag-james-pennsylvania-addition-t-mobilesprint-lawsuit-keeps-states-momentum; see also DOJ,
‘Justice Department Settles with T-Mobile and Sprint’, supra note 58.
62 DOJ, ‘Remarks of Assistant Attorney General Makan Delrahim Delivered at the New York State Bar
Association’ (25 January 2018), available at www.justice.gov/opa/speech/remarks-assistant-attorney-
11

Overview
antitrust authorities and in what order? Further, how can antitrust authorities design rem-
edies that address competitive concerns across jurisdictions? Two useful resources that con-
sider multi-jurisdictional merger remedies are the International Competition Network’s (ICN)
2016 ‘Merger Remedies Guide,’ as well as the Organisation for Economic Co-operation and
Development’s (OECD) 2013 publication on ‘Remedies in Cross- Border Merger Cases’.63 Both
publications reflect the views of antitrust authorities across the globe that extensive coopera-
tion is necessary to achieve consistent and efficient merger remedies. To take advantage of the
benefits of cooperation, merging parties should time their filing obligations in a way that will
allow reviewing agencies to cooperate at key stages, and should grant appropriate confidenti-
ality waivers that will facilitate communication and information sharing among agencies.64
Antitrust authorities, in turn, should initiate contact with their counterparts as early as prac-
ticable (as soon as the need for remedies becomes evident),65 and should continue regular dis-
cussions about the timing of remedy procedures, proposed divestiture buyers, and draft rem-
edy proposals.66 Based on these communications, agencies may decide to implement separate,
but non-conflicting, remedies, or the same remedy.67 If they do so, agencies may then consider
implementing monitoring procedures, such as a common monitoring trustee, that will facili-
tate cooperation in overseeing the remedy.68 These multi-jurisdictional efforts ultimately result
in benefits for both merging parties and antitrust authorities, as cooperation often results in
consistent, interoperable outcomes across jurisdictions that are more likely to succeed and
minimise duplication of work for all involved.69 Given the number of cross-border transac-
tions, future editions of this book will continue to consider the complexities associated with
multi-jurisdictional merger remedy practice.
We thank each of the authors for their contribution and trust that you will find this publica-
tion to be a helpful resource in your merger remedy practice.
63 ICN, Merger Remedies Guide (2016), available at https://www.internationalcompetitionnetwork.org/

wpcontent/uploads/2018/05/MWG_RemediesGuide.pdf; OECD, Policy Roundtables: Remedies in
Cross-Border Merger Cases (2013), available at www.oecd.org/daf/competition/Remedies_Merger_
Cases_2013.pdf.
64 OECD, supra note 63, at 5–6; ICN, supra note 63, at 29.
65 OECD, supra note 63, at 5; ICN, supra note 63 at 29.
66 ICN, supra note 63, at 29.
67 Id. at 20; OECD, supra note 63, at 5.
68 ICN, supra note 63, at 29; OECD, supra note 63, at 6.
69 ICN, supra note 63, at 29.
12

PART I
OVERARCHING
PRINCIPLES AND
CONSIDERATIONS

02
Key Principles of Merger Remedies
Ilene Knable Gotts1
Most transactions are not anticompetitive and many benefit consumers. Competition laws
are designed to address those transactions that are likely to substantially lessen competition
in a relevant market. Such harm can result either from a firm’s acquisition of market power or
the increasing likelihood of anticompetitive coordination. In some jurisdictions, the competi-
tion law mandate specifies a broader ‘public interest standard’ or other social policies, such as
‘black empowerment’.
In some jurisdictions, such as that of the European Commission, the competition authori-
ties’ decision not to approve the transaction effectively kills the transaction. In other juris
dictions, such as the United States2 and Canada, the competition authority must challenge the
transaction in a court to block its consummation, and the judge ultimately decides the legality
of the transaction. In both types of jurisdiction transaction parties will frequently try to resolve
the concerns of a competition authority by offering potential remedies and, if accepted by the
competition authority, entering into a consent decree.
Core universal goal: preserving competition

The universal goal of remedies is preserving competition that would otherwise be lost because
of the transaction, while permitting, if possible, the realisation of efficiencies and other ben-
efits.3 As expressed in the US Department of Justice’s 17 June 2011 Merger Remedies Guide (the
DOJ Guide):
1 Ilene Knable Gotts is a partner at Wachtell, Lipton, Rosen & Katz.

2 At the federal level, the two antitrust agencies are the US Department of Justice’s Antitrust Division and
the Federal Trade Commission.
3 International Competition Network, ICN Merger Working Group, Merger Remedies Guide (2016),
available at www.internationalcompetitionnetwork.org/uploads/library/doc1082.pdf (the ICN Merger
Remedies Guide).
15

The touchstone principle . . . in analyzing remedies is that a successful merger

remedy must effectively preserve competition in the relevant market. . . . In hori-
zontal merger matters, structural remedies often effectively preserve competition,
including when used in conjunction with certain conduct provisions. Structural
remedies may be appropriate in vertical merger matters as well, but conduct
remedies often can effectively address anticompetitive issues raised by vertical
mergers. In all cases, the key is finding a remedy that works, thereby effectively
preserving competition in order to promote innovation and consumer welfare.4
The underlying principles to be considered are: (1) the need for a tailored remedy; (2) duration;
(3) practicality; and (4) risk.
Need for a tailored remedy

The starting point for each competition authority is the determination of the nature and scope
of potential competitive harm within the jurisdiction before requiring or agreeing to propose
remedies.5 Next, to be effective, the remedy must be tailored to the harm. As indicated in the
DOJ Guide:
there should be a close, logical nexus between the proposed remedy and the alleged
violation – and the remedy should fit the violation and flow from the theory or
theories of competitive harm. Effective remedies preserve the efficiencies created
by a merger, to the extent possible, without compromising the benefits that result
from maintaining competitive markets.6
The DOJ Guide expressly states that the goal is not to determine outcomes or pick winners or
losers, and decree provisions should not protect or favour particular competitors, for instance,
by removing the incentive for individual firms to compete. The remedy should also give due
consideration to how the remedy changes the competitive dynamics of the market and the
incentives of the merged firm post-remedy.7
4 US Dep’t of Justice, Antitrust Division, Policy Guide to Merger Remedies, at 1–2 (June 2011), available
at www.justice.gov/opa/pr/antitrust-division-issues-updated-merger-remedies-guide. The 2011 DOJ
Guide indicates that the phrase ‘preserving competition’ includes the concept of restoring competition
or enhancing consumer welfare, depending on the specific transaction. In consummated mergers, the
remedy focus will be on effectively restoring competition in the relevant market, including possibly
completely unwinding the transaction. In September 2018, Makan Delrahim, Assistant Attorney
General of the Antitrust Division, announced that the Antitrust Division had withdrawn its 2011 Policy
Guide to Merger Remedies, with the 2004 Policy Guide remaining in effect until a new policy is released.
See www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-201
8-global-antitrust. However, these passages from the 2011 Guide still reflect the practice of the DOJ.
5 ICN Merger Remedies Guide p. 2.
6 DOJ Guide p. 4.
7 Id. p. 5.
16

Duration
A remedy should seek to address the competitive harm over its expected duration.8 Most trans-
actions that raise competition concerns involve firms that are actual or potential competitors
(i.e., ‘horizontal merger’ concerns), whose potential would permanently change the market
structure. Therefore, as discussed in greater detail in other chapters of this book, the most com-
mon remedy is to prevent common control over some or all of the overlapping assets through
a divestiture of the overlapping assets. Precedent during the Obama administration included
the US agencies imposing a variety of behavioural conditions to support a structural divestiture
to resolve horizontal merger concerns. Transition services arrangements and supply arrange-
ments have become more routinely included beyond the pharmaceutical industry, where they
had already been the norm.9 Mandatory licensing provisions may also alleviate competitive
concerns by enabling competitors access to a key input;10 some of the consents, however, include
not only a licence for technology, but the right to purchase the technology or to transfer the
licence to a third party later.11 In addition, non-discrimination provisions have been included
to incorporate the concepts of equal access, equal effort and equal terms. Transactions involv-
ing vertically aligned businesses can also raise concerns to the extent that the transaction will
create changed incentives and enhance the ability of the merged firm to impair the competi-
tive process. The remedy in such situations aims to counteract these changed incentives or to
eliminate the merged firm’s ability to act on them.12 These conduct provisions are imposed for a
set number of years – typically two to five, except for licensing, which may be a perpetual grant.
The Trump administration – especially its Antitrust Division – has expressed concerns
over the use of conduct remedies, preferring the benefit of an upfront structural remedy. This
is discussed further in the next section. One of the aspects of behavioural remedies criticised is
determining their expiration.
8 Id.
9 See, e.g., Press Release, US Dep’t of Justice, Justice Department Requires Divestitures in Order for Regal
Beloit Corporation to Proceed with Its Acquisition of A.O. Smith Corporation’s Electric Motor Business
(17 August 2011), available at www.justice.gov/opa/pr/2011/August/11-at-1056.html; Hold Separate
Stipulation and Order, United States v. Bemis Co Inc, No. 1:10-cv-00295 (DDC 24 February 2010), available
at www.justice.gov/‌atr/cases/‌f255700/255715.htm.
10 See, e.g., Press Release, US Dep’t of Justice, Justice Department Requires Google Inc to Develop and
License Travel Software in Order to Proceed with Its Acquisition of ITA Software Inc (8 April 2011),
available at www.justice.‌gov/opa/pr/2011/April/11-at-445.html; Press Release, US Dep’t of Justice,
Justice Department Allows Comcast-NBCU Joint Venture to Proceed with Conditions (18 January 2011),
available at
www.justice.‌gov/opa/pr/2011/January/11-at-061.html.
11 See, e.g., Proposed Final Judgment, US Dep’t of Justice, United States v. Cameron Int’l Corp, No. 1:09-cv-
02165 (DDC 17 November 2009), available at www.justice.gov/atr/cases/f252000/252080.htm.
12 See, e.g., Competitive Impact Statement, United States v. Comcast Corp, 1:11-cv-00106 (DDC 2011),
available at www.justice.gov/atr/cases/f266100/266158.pdf; Competitive Impact Statement, United
States v. Google Inc, 1:11-cv-00688 (DDC 2011), available at www.justice.gov/atr/case-document/
file/497671/download; Competitive Impact Statement, United States v. Ticketmaster Entm’t Inc, 1:10-cv-
00139 (DDC 2010), available at www.justice.gov/atr/case-document/file/513376/download; Competitive
Impact Statement, United States v. Charter Commc’ns Inc, 1:16-cv-00759 (DDC 2016), available at www.
justice.gov/atr/file/850161/‌download.
17

Practicality
As indicated in the ICN Merger Remedies Guide, a ‘remedy should be capable of being imple-
mented, monitored, and enforced bearing in mind the need for detecting non-compliance and
the resources involved in the enforcement of the remedy’.13 Competition authorities are reticent
to adopt regulatory-like remedies (e.g., price controls) that require monitoring of internal com-
pany conduct and may not easily ensure compliance. In addition, undertakings typically con-
tain provisions that permit for modification in the event of changed circumstances. The ongo-
ing oversight (compliance reporting) functions will also be considered. A monitor, paid for by
the merged firm, may be used in some situations.
Conduct remedies have primarily been used to resolve concerns in vertical mergers, but
such remedies are not always accepted by the DOJ. For instance, during the Obama administra-
tion, Deputy Assistant Attorney General Jon Sallet indicated:
In vertical transactions, observers sometimes assume that conduct remedies

will always be available and sufficient. But that is not the current practice of the
Division – if it ever was. . . . Some vertical transactions may present sufficiently
serious risks of foreclosing rivals’ access to critical inputs or customers, or other-
wise threaten competitive harm, that they require some form of structural relief
or even require that the transaction be blocked.14
The Trump administration leadership at the Antitrust Division has indicated that, although it
is not saying it will never accept behavioural remedies, the standard for proving that the rem-
edy will cure the anticompetitive harm is high. Rather, the DOJ will typically require structural
relief rather than behavioural remedies to remedy antitrust concerns. In a keynote speech at the
ABA Fall Forum on 16 November 2017, Assistant Attorney General Makan Delrahim explained
that behavioural remedies are ‘fundamentally regulatory, imposing ongoing government over-
sight on what should preferably be a free market’.15 Such regulatory schemes ‘require central-
ized decisions instead of a free market process. They also set static rules devoid of the dynamic
realities of the market.’16 In addition, such remedies are challenging to enforce, presuming ‘that
the Justice Department should serve as a roving ombudsman of the affairs of business; even if
we wanted to do that, we often don’t have the skills or the tools to do so effectively.’17
13 ICN Merger Remedies Guide p. 4.

14 Jon Sallet, Deputy Assistant Attorney General of the Antitrust Division, Remarks at the American Bar
Association Fall Forum, The Interesting Case of the Vertical Merger (17 November 2016), available at
www.justice.gov/opa/speech/deputy-assistant-attorney-general-jon-sallet-antitrust-divisio
n-delivers-remarks-american.
15 Makan Delrahim, Assistant Attorney General of the Antitrust Division, Keynote Address at American
Bar Association’s Antitrust Fall Forum (16 November 2017), available at www.justice.gov/opa/speech/
assistant-attorney-general-makan-delrahim-delivers-keynote-address-american-bar. See also
Improving the Antitrust Consensus, Remarks of Assistant Attorney General Makan Delrahim Delivered
at the New York State Bar Association (25 January 2018), available at www.justice.gov/opa/speech/
remarks-assistant-attorney-
16 Id.
17 Id.
18

It is unclear to what extent the FTC will diverge from the DOJ by accepting conduct rem-
edies in the future.18 FTC Competition Bureau Director Bruce Hoffman indicated: ‘[T]he FTC pre-
fers structural remedies to structural problems, even with vertical mergers.’19 But, at the same
time, the FTC recognises that:
in some cases . . . a behavioral or conduct remedy can prevent competitive harm

while allowing the benefits of integration . . . if the FTC looks closely at a vertical
merger that raises the concerns . . ., no one should be surprised if the FTC requires
structural relief. . . . If that can’t be achieved without sacrificing the efficiencies
that motivate the merger, then [it] can look at conduct remedies. If those won’t
work – or will be too difficult and problematic . . . to be confident that they will
work without an excessive commitment of FTC resources where [it is] effectively
turned into a regulator – then there should be no surprise if [the FTC were to] seek
to block the merger.20
Risk
Inherent in any remedy is the potential risk that the competition authority’s goal of preserving
competition will not be achieved. The three most common risks are: (1) a package or composi-
tion risk; (2) a purchaser risk; and (3) implementation risks. The extent to which a particular
jurisdiction will knowingly tolerate risk varies depending on the specific laws and policies of
that jurisdiction, including the extent to which the authority has the power to remedy failings
after entering into the consent and the transaction’s closing.
Package and composition risks

This risk factor relates to the adequacy of the business or assets to be divested in a structural
remedy, as well as the efficacy of the conditions and prohibitions prescribed in a behavioural
remedy. In January 2017, the FTC issued a retrospective study,21 reviewing 89 merger orders
entered into between 2006 and 2012. The FTC concluded that, although the FTC’s merger remedy
practices are generally effective, certain areas needed to be adjusted.
First, the study found that divestiture buyers of a more limited package of assets were
deemed not to succeed at times, even when the buyer was identified upfront. The FTC indi-
cated that, in future, parties can expect that proposals to divest selected assets will undergo
more detailed scrutiny and the Commission will accept a proposal of less than the entire ongo-
ing business only if the parties and the divestiture buyer demonstrate that divesting the more
18 Bruce Hoffman, then Acting Director, Bureau of Competition, Remarks at Credit Suisse 2018 Washington
Perspectives Conference, Vertical Merger Enforcement at the FTC (10 January 2018), available at
www.ftc.gov/system/files/documents/public_statements/1304213/hoffman_vertical_merger_‌speech_final.
pdf.
19 Id. at 7. The DOJ unsuccessfully challenged the combination of AT&T Inc and Time Warner Inc, seeking
structural rather than behavioural remedies. See memorandum decision, US v. AT&T Inc, No. 17-2511
(RJL) (DDC 12 June 2018).
20 Id. at 8-9.
21 Fed Trade Comm’n, The FTC’s Merger Remedies 2006–2012 (January 2017), available at www.ftc.gov‌/
system/files/documents/reports/ftcs-merger-remedies-2006-2012-report-bureaus-competition-
economics/p143100_ftc_merger_remedies_2006-2012.pdf.
19

limited asset package is likely to maintain or restore competition. An example cited is that
ongoing business divestiture is infeasible. In addition, the Commission indicated that it may
require divestiture of assets (including manufacturing facilities) related to additional comple-
mentary products, the use of brand or trade names, or other affirmative conduct obligations,
including facilitating the transfer of customers, to ensure the buyer’s viability.
Second, the study indicated that divestiture buyers have sometimes had unforeseen com-
plexities in transferring critical back-office functions and need more time to transition these
services. The FTC indicates that it is important that the divestiture buyer is able to conduct due
diligence to understand what back-office support services it needs and that it will undertake
additional scrutiny in this area. In addition, the FTC takes the position that critical back-office
functions on a transitional basis must be supplied to the divestiture buyer at no more than the
parties’ cost.
In the past few years, the US agencies have more frequently required divestitures to include
out-of-market assets (i.e., a divestiture package that goes beyond the assets in the relevant mar-
ket) to ensure that the divestiture buyer has adequate assets to be effective.22 The same is true
in consummated merger challenges. In both Chicago Bridge 23 and Polypore,24 the FTC required
the parties to include assets outside of the market to restore competition within the relevant
market and to provide the divestiture buyer with the ability to compete. In addition, in Valeant,25
the FTC required Valeant not only to divest the entire hard contact lens business it had acquired
from Paragon Holdings in 2015, but also the assets it had later acquired that the FTC deemed
necessary to ensure that the divested business would continue to have access to the disks that
are made into the finished contact lenses.
In certain industries, the package risk includes the potential that the assets will deteriorate
significantly prior to divestiture (or even following divestiture if the divestiture buyer is unable
to stave off such deterioration). Two ‘failed’ FTC divestitures illustrate this risk. First, in 2015, the
FTC approved the divestiture of 146 supermarkets to Haggen Holdings LLC (Haggen) to resolve
concerns about Albertsons’ acquisition of Safeway.26 On 14 August 2015, Haggen announced that
it would close 27 acquired stores and, on 8 September 2015, it filed for Chapter 11 bankruptcy
to permit it to reorganise with only its core profitable stores. On 24 September 2015, Haggen
22 For a discussion of remedies, including out-of-market assets from the FTC’s perspective, see Dan
Ducore, Fed Trade Comm’n, Bureau of Competition, Divestitures may include assets outside the market
(24 April 2015), available at www.ftc.gov/news-events/blogs/competition-matters/2015/04/divestitures
-may-include-assets-outside-market.
23 FTC Opinion, In the Matter of Chicago Bridge & Iron Company, FTC Docket No. 9300 (6 January 2005),
available at www.ftc.gov/sites/default/files/documents/cases/2005/01/050106opionpublicrecordversion
9300_0.pdf.
24 FTC Opinion, In the Matter of Polypore International Inc, FTC Docket No. 9327 (13 December 2010),
available at www.ftc.gov/sites/default/files/documents/cases/2010/12/101213polyporeopinion.pdf?utm_
source=
‌govdelivery.
25 Agreement Containing Consent Order, Valeant Pharmaceuticals Int’l Inc, FTC File Nos. 151-0236 and
161-0028 (7 November 2016), available at www.ftc.gov/system/files/documents/cases/161107_paragon_
pelican‌_agreement_2.pdf.
26 Press Release, Fed Trade Comm’n, FTC Requires Albertsons and Safeway to Sell 168 Stores as a Condition
of Merger (27 January 2015), available at www.ftc.gov/news-events/press-releases/2015/01/ftc-requires-
albertsons-safeway-sell-168-stores-condition-merger.
20

announced that it would exit from California, Arizona and Nevada, and continued to operate
only 37 stores in those states. Haggen, Cerberus International and Safeway petitioned the FTC
on 23 September 2015, seeking approval on an expedited basis of a modification of the consent
to permit Albertsons to rehire Haggen employees who were otherwise being terminated by
Haggen, without violating the consent order.27 The FTC had no choice but to grant this request.
Third, the divestiture buyer in the Dollar Tree/Family Dollar 28 transaction had mixed suc-
cess in the stores it acquired. Of course, the divestiture occurred in a very challenging retail
industry environment generally.
Purchaser risk
The identity of the divestiture buyer may, on rare occasions, potentially contribute to the dives-
titure’s lack of success. The FTC’s November 2012 order approving the divestiture of Hertz’s
Advantage low-cost rental business and rights to operate 29 Dollar Thrifty airport locations to
Simply Wheelz – a subsidiary of Franchise Services of North America, which at that time oper-
ated U-Save Car Rental – may be such a case.29 Four months after the FTC issued its final order,
Simply Wheelz filed for bankruptcy, reportedly in part owing to Hertz’s exercise of its right to
terminate its fleet-leasing arrangement with Advantage, since Advantage owed Hertz in excess
of US$39 million. Both US agencies often require the parties to identify an acceptable upfront
buyer before accepting divestiture packages. The upfront buyer requirement is justified by
the agencies as being necessary to ensure that the divestiture will be effective in maintaining
competition at the same level as it had been pre-transaction. The transaction parties, however,
can face substantial delay from the process: the need to identify a divestiture buyer, negotiate
a divestiture agreement, and have that buyer and the divestiture package vetted by the agen-
cies before the main transaction is permitted to proceed can literally add months to the merger
review process.
The factors considered by competition authorities when approving a divestiture buyer that
can mitigate purchaser risk are: (1) the financial capability to purchase the divested business
and make necessary investments, and commitment to remain in the market; (2) the managerial
expertise to run the business; and (3) the operational capacity and resources to run the divested
business, particularly if the divestiture consists of less than a stand-alone business.
Implementation risk
Competition authorities consider the risk of potential failure either because of the merged
firm’s conduct or other market factors, and the potential for circumvention. For post-closing
divestitures, hold-separate or asset preservation agreements can help to prevent interim
27 Application for Approval of Waiver Agreement to the Haggen Divestiture Agreement, In re Cerberus
Inst’l Partners V LP, No. C-4504, Fed Trade Comm’n (23 September 2015), available at www.ftc.gov/
system/files/‌documents/cases/150925cerberusapplication.pdf.
28 Press Release, Fed Trade Comm’n, FTC Requires Dollar Tree and Family Dollar to Divest 330 Stores
as Condition of Merger (2 July 2015), available at www.ftc.gov/news-events/press-releases/2015/07/
ftc-requires-dollar-tree-family-dollar-divest-330-stores.
29 Press Release, Fed Trade Comm’n, FTC Requires Divestitures for Hertz’s Proposed $2.3 Billion
Acquisition of Dollar Thrifty to Preserve Competition in Airport Car Rental Markets (15 November 2012),
available at www.ftc.gov/news-events/press-releases/2012/11/ftc-requires-divestitures-hertz
s-proposed-23-billion-acquisition.
21

competitive harm to the divestiture assets. In addition, to reduce implementation risk, under-
takings frequently provide that the competition authority may require the divestiture to occur
‘at no minimum price’ after the initial time period for a merged firm-driven sale has passed and
the divestiture process has been relinquished to a divestiture trustee. Use of a monitor with
industry experience can mitigate some of the implementation concerns in a transaction involv-
ing ongoing behavioural provisions.
Remedies in a global competition setting

Increasingly for multi-jurisdictional transactions, competition authorities have cooperated
during the investigation stage and, on some occasions, at the remedies stage. The ICN Merger
Remedies Guide indicates that each competition authority should exercise its independent
judgement in reaching its decision regarding the need for a remedy.30 Nevertheless, in many
investigations, coordination among competition authorities may avoid conflicting remedies (i.e.,
when one or more authority enters into separate remedy orders) or, in some cases, even the need
for a particular jurisdiction to enter into a remedy itself because of the actions taken by another
jurisdiction.31 Such coordination and cooperation is particularly needed when the authority
reaches the conclusion that an effective remedy should include assets outside of its jurisdiction.
By way of example, in Holcim/Lafarge,32 the FTC conditioned clearance on the divestiture
of plants and terminals, including a terminal in Alberta, Canada and a cement plant in Ontario,
Canada. Canadian assets that are named in the FTC consent decree were included by the FTC
as necessary to remedy competitive concerns in northern US markets. The Canadian consent –
entered into the same day – provides mirror provisions.
Similarly, in ZF Friedrichshafen AG/TRW Automotive Holdings Corp,33 the FTC conditioned
approval of a US$12.4 billion merger that would create the world’s second-largest auto parts
supplier with the divestiture of TRW’s linkage and suspension business in North America and
Europe, even though only suppliers that have production facilities in the United States, Canada
and Mexico were deemed eligible to compete for US business.34 The FTC’s order followed the
EC’s clearance, which was subject to Friedrichshafen’s commitment to divest TRW’s chassis
components businesses in the European Economic Area.
30 ICN Merger Remedies Guide at p. 3.

31 Press Release, US Dep’t of Justice, Justice Department Will Not Challenge Cisco’s Acquisition of
Tandberg (29 March 2010), available at www.justice.gov/opa/pr/justice-department-will-not-challenge-
cisco-s-acquisition-tandberg; Melissa Lipman, FTC Approves Novartis’ $16B GSK Oncology Buy With
Fixes, Law360 (23 February 2015), available at www.law360.com/articles/624083/ftc-approves-novartis-
16b-gsk-oncology-buy-with-fixes.
32 Press Release, Fed Trade Comm’n, FTC Requires Cement Manufacturers Holcim and Lafarge to Divest
Assets as a Condition of Merger (4 May 2015), available at www.ftc.gov/news-events/press-releases/
2015/05/ftc-requires-cement-manufacturers-holcim-lafarge-divest-assets.
33 Press Release, Fed Trade Comm’n, FTC Puts Conditions on Merger of Auto Parts Suppliers ZF
Friedrichshafen AG and TRW Automotive Holdings Corp (5 May 2015), available at www.ftc.gov/
news-events/press-releases/2015/05/‌ftc-puts-conditions-merger-auto-parts-suppliers-zf.
34 As noted in the Director’s Report, Spring 2016, the EU had determined as well that the merger would
reduce competition in the chassis components for cars and trucks market. The broader divestiture
resolved concerns in both jurisdictions. Deborah L Feinstein, Bureau of Competition, Director’s
Report, Spring 2016, available at www.ftc.gov/system/files/documents/public_statements/944113/
feinstein_-_spring_update_april_2016.pdf.
22

In addition, in NXP Semiconductors, the parties agreed to divest all NXP assets that are used
primarily for manufacturing, research and development of RF power amplifiers, including a
manufacturing facility in the Philippines, a building in the Netherlands to house management
and some testing labs, as well as all patents and technologies used exclusively or predominantly
for the RF power amplifier business, based on the finding that the market for RF power amplifi-
ers is worldwide. The FTC worked with the staff of antitrust agencies in the EU, Japan and South
Korea on all aspects of the analysis, including potential remedies, in order to reach compat-
ible approaches on an international scale. The proposed revisions to the Antitrust Guidelines
for International Enforcement and Cooperation recognises these factors when it indicates that
the agencies will seek a remedy that involves conduct or assets outside the United States if it
deems that doing so is necessary to ensure the remedy’s effectiveness and is consistent with the
agency’s international comity analysis.
23

03
Economic Analysis of Merger Remedies
Mary Coleman and David Weiskopf 1
Introduction
Merger remedies may be offered by the merging parties or demanded by antitrust enforcers in
cases in which a merger promises benefits to consumers but also risks harm to competition in
one or more markets. Blocking such a merger certainly prevents the competitive harm from
occurring, but it also denies the consumer benefits that would otherwise flow from the com-
bination of assets. Remedies that reliably target the source of competitive harm allow society
to reap the benefits of efficiency-enhancing mergers that would, in the absence of remedies,
raise competitive concerns. In this chapter, we consider economic issues that arise in develop-
ing merger remedies.
We distinguish between current antitrust enforcement agency practice regarding merger
remedies and how agencies should, from an economic perspective, develop remedies. As we
discuss in detail below, when crafting merger remedies, antitrust enforcers strive to restore
competition to pre-merger levels. From an economic perspective, however, the enforcer’s goal
should be to maximise the merger’s net benefits – i.e., the sum of consumer benefits less harms.
Thus, the economic approach to remedies would explicitly consider a remedy’s ability not only
to restore pre-merger competitive conditions but also to preserve consumer benefits from the
merger. Using an approach based on maximising net benefits, the enforcement agency and
merging parties might reject a remedy that would achieve the goal of restoring pre-merger com-
petition in favour of one that allowed efficiencies to be realised and thus resulted in greater net
benefits, even if it did not restore pre-merger competition fully. In practice, however, antitrust
enforcement agencies typically judge a remedy’s effectiveness at restoring competition rather
than maximising net benefits.
1 Mary Coleman and David Weiskopf are executive vice presidents at Compass Lexecon. The authors
would like to acknowledge the very helpful edits and comments provided by their colleagues Mark
Israel and Theresa Sullivan.
24
Self-enforcing and non-self enforcing remedies

A merger remedy is more likely to be effective if it does not require ongoing enforcement by the
antitrust authorities. Self-enforcing remedies, also referred to as structural remedies, are those
that do not require ongoing enforcement and thus are typically preferred by antitrust enforcers.
Self-enforcing remedies often involve the sale of physical assets or the sale or licensing of intel-
lectual property (IP) rights by the merging firms to strengthen existing competitors or create
new competitors.
Non-self enforcing remedies, also referred to as behavioural or conduct remedies, require
ongoing monitoring and involve constraints on post-merger conduct by the merged firm.
Examples include firewall and non-discrimination provisions. Antitrust enforcers may be
willing to consider behavioural remedies if structural remedies are not practical or would also
eliminate significant competitive benefits from the transaction as whole. For example, guid-
ance issued by the Federal Trade Commission (FTC) in 2012 indicates a willingness to consider
non-structural remedies in some circumstances.2 Similarly, the remedies policy guide issued
by the Antitrust Division of the US Department of Justice (DOJ) in 2011 expresses openness
towards a variety of remedies, noting that both structural and conduct remedies may be usefully
employed, depending on the particular circumstances of the proposed merger.3 However, recent
DOJ statements indicate that they currently are less willing to consider non-structural reme-
dies. For example, DOJ Assistant Attorney General Makan Delhrahim stated in September 2018:
We are also taking a close look at our remedies policy. Negotiating remedies to
anticompetitive mergers often adds significant time to the merger review, and
our commitment to shortening the duration of merger reviews extends to the
remedies phase. While our review is underway, I want to be transparent with the
bar about what the Division’s practices will be. To that end, today, I announce the
withdrawal of the 2011 Policy Guide to Merger Remedies. The 2004 Policy Guide to
Merger Remedies will be in effect until we release an updated policy.4
2 Negotiating Merger Remedies, Statement of the Bureau of Competition of the Federal Trade
Commission, January 2012 (the FTC 2012 Remedies Guide), p. 5.
3 Antitrust Division Policy Guide to Merger Remedies, US Department of Justice, Antitrust Division,
June 2011 (the DOJ 2011 Policy Guide), p. 4.
4 See DOJ Assistant Attorney General Makan Delrahim’s ‘Remarks as Prepared for the 2018 Global
Antitrust Enforcement Symposium,’ 25 September 2018, available at https://www.justice.gov/opa/
speech/file/1096326/download, site visited 3 September 2019. Thus, DOJ’s remedies policy is apparently
in a state of flux. We still view the DOJ 2011 Policy Guide as the most current statement by the DOJ
regarding its merger remedies policy and reference it where we believe it still reflects current DOJ
merger remedy practice.
25

The DOJ’s resistance to non-structural remedies is demonstrated by its rejection of remedies

offered by the parties in the AT&T/Time Warner merger even though it had accepted similar
remedies in the Comcast/NBC-Universal merger.5
Self-enforcing remedies are typically preferred

It is straightforward to demonstrate why antitrust authorities prefer self-enforcing remedies.
Consider a merger that provides an incentive for the merged firm to raise price.6 Now consider
two remedies that promise to restore the pre-merger competitive outcome. The first remedy
changes the merged firm’s incentives so that it no longer would be profitable for it to raise prices.
The second remedy involves a promise or commitment by the merged firm not to raise prices,
even though it still has the incentive to do so post-merger. The first remedy changes the merged
firm’s incentives and, if properly crafted, would be self-enforcing and not require ongoing gov-
ernmental oversight; the pre-merger competitive outcome is restored by changing the firm’s
incentives and then relying on the competitive forces of the market to enforce competitive
behaviour. The second remedy does not change incentives but rather requires the firm to act
against its self-interest; such a remedy requires an effective commitment mechanism, such as
ongoing monitoring and the assessment of penalties if the firm does not fulfil its commitment.
Antitrust enforcers typically prefer the first remedy to the second remedy because reliance on
market forces to discipline firm behaviour is viewed as being more effective and less costly.
Antitrust enforcers may be willing to accept commitments from firms not to engage in anti-
competitive behaviour, however, if the terms of such commitments are readily (and cheaply)
monitored, there is a punishment mechanism for violating them, and a self-enforcing remedy
is not feasible or there is some benefit from not requiring a self-enforcing remedy.
5 See Post trial brief of the United States, United States of America, Plaintiff, v. AT&T Inc., DirecTV Group
Holdings, LLC, and Time Warner, Inc., Defendants, 8 May 2018, pp. 2, 3 (‘Defendants responded to this
lawsuit with 1,000 half-baked letters unilaterally offering to arbitrate price increases because they know
full well they would be able to raise their distribution rivals’ costs post-merger. So they sought to try
to recreate, as a remedy, an element of past regulatory remedies that the FCC found necessary in every
recent instance of vertical integration. See Comcast/NBCU Order, ¶ 35 (summarizing same finding in
prior proceedings). But a self-imposed remedy is no remedy at all – it does not replace the preferred
free-market competition envisioned by the Clayton Act. Even more importantly, arbitration would
not solve the problem in this case. Never before has the country faced a merger involving the largest
video distributor acquiring content its rivals need, with a nationwide footprint that would provide no
benchmarks for arbitration. And never before have the United States and the Court been left without
the assistance of the FCC to craft, impose, and supervise behavioral conditions. Moreover, such a
remedy would not address the threat to competition from AT&T’s control over HBO and the increased
likelihood of coordination with Comcast/NBCU. Accordingly, after concluding this merger violates
Section 7 of the Clayton Act, the Court should impose a market-based structural remedy to prevent its
anticompetitive effects.’).
6 Although we use the example of a price increase as a competitive harm, mergers may provide incentives
for other types of harm, such as degrading quality.
26

Structural remedies are generally self-enforcing because they focus on replicating (or mov-
ing toward) pre-merger incentives and rely on market forces, whereas behavioural remedies
generally require monitoring to enforce, which may be costly and imperfect.7 As an example
of how a structural remedy works, consider a horizontal merger between two firms that manu
facture differentiated products that raises competitive concerns. If the products of the two firms
are close competitors, then neither firm has an incentive to raise prices pre-merger, in part
because it would expect to lose a significant amount of sales to the competing firm. Post-merger,
however, the merged firm’s incentives are different. Raising the price of one of the products no
longer results in the diversion of sales to a different company; instead, a significant amount of
that diversion is internalised in the merged firm. Thus, post-merger, the merged firm would
have the unilateral incentive to raise the post-merger price of one (or both) products because it
would face a significantly smaller amount of lost sales than it would have pre-merger.
How can this undesirable outcome be eliminated by a remedy? A remedy that divests one of
the competing products to an independent buyer counteracts the post-merger economic incen-
tive of the merged firm to raise the post-merger price on the other product because there is no
longer internalisation of diversion. To be effective, such a divestiture relies on the independ-
ent buyer to ‘step into the shoes’ of the divesting firm and act on its incentives to maximise its
own profit. Because it relies on firms’ desires to maximise their profits, a divestiture remedy is
self-enforcing and does not require ongoing monitoring.
Alternatively, a behavioural remedy in this situation could allow the merged firm to con-
tinue to sell both competing products but commit to not raising prices. Such a behavioural
remedy does not alter the merged firm’s profit-maximising incentives; rather, it seeks to prevent
7 See, e.g., J Kwoka, ‘Merger Remedies: An Incentives/Constraints Framework’, The Antitrust Bulletin, Vol
62(2), 2017, p. 369 (‘divestiture works not simply because it holds the number of suppliers constant, but
because it maintains strong incentives for independent competitive behavior and sharp boundaries
between firms . . . the standard economic model predicts that market forces will yield the same
competitive outcome and will do so without the need for further intervention by the competition
agency. No continuing oversight is necessary to realize the desired competitive result, any more than
it was in the premerger industry.’), pp. 371–2 (‘An effective conduct remedy requires several things . . . it
must provide for some enforcement mechanism involving monitoring and administration to ensure
effectiveness.’); J Kwoka and D Moss, ‘Behavioral Merger Remedies: Evaluation and Implications for
Antitrust Enforcement,’ The American Antitrust Institute, 2012, pp. 5, 6 (‘once created, the divested
entity will act as an independent firm, seeking to maximize profit by engaging in the same competitive
actions as other firms in the market. Moreover, once such a new firm is created, there typically is
no on-going oversight or other action required of the competition authority, and no constraints or
reporting requirements on the firm . . . behavioral rules usually must be supplemented with close and
ongoing oversight of the merged firm’s actual conduct, typically relying upon a monitor with authority
to require reports and perhaps to intervene in the decision-making of the merged firm.’); and T Hoehn,
‘Structure Versus Conduct – A Comparison of the National Merger Remedies Practice in Seven European
Countries,’ Int J of the Economics of Business, Vol 17, No. 1, February 2010, p. 13 (‘. . . access remedies tend
to require some form of monitoring and regulatory mechanisms that are similar to the compliance
monitoring of behavioural remedies.’).
27

the merged firm from acting on those incentives in ways that could harm competition.8 Such
a remedy is unlikely to be attractive to antitrust enforcers, however, because it would require
ongoing monitoring by the enforcement agency, which would generally be costly and difficult.9
A commitment never to raise prices would not be sustainable as there are legitimate reasons
to raise prices even in the absence of the merger, such as increased costs, increased demand
or quality improvements. Not only would it be difficult for the enforcement agencies to assess
whether a proposed price increase is justified, but the merged firm would object to the loss of
flexibility to react to competitive pressures if pre-approval of price changes was required. Such
a behavioural remedy is thus unlikely to be practical or acceptable and, in fact, may be harmful
to competition by preventing the merged firm from responding to marketplace forces.
Horizontal versus vertical mergers

Whether a self-enforcing remedy or a non-self enforcing remedy may be effective and accept-
able depends most obviously on whether the merger is mostly horizontal or mostly vertical.
In the case of a horizontal merger (where the merging firms compete in one or more lines of
business), the competitive concern is the creation or enhancement of market power from com-
bining assets that, absent the merger, would be used to compete. Such market power may be
used to raise prices or otherwise harm consumers. In addressing potential harm from a hori-
zontal merger, antitrust agencies typically require self-enforcing, structural remedies where
the merging firms are required to divest assets needed to recreate competition lost through
the merger.10 For example, the divestment of a manufacturing facility and associated business
assets to a smaller competitor or a firm not already present in the relevant market may allow
that competitor to replace the competition lost because of the merger and to act (together with
other competitors) as an effective check on the merged firm. In some cases, there may also be
behavioural commitments along with a structural component to the remedy.11
In the case of a vertical merger (where the merging firms do not compete but instead have
an upstream/downstream or supplier/buyer vertical relationship), behavioural remedies may
be more appropriate and desirable.12 In such mergers, it is well recognised that there are effi-
ciencies from the elimination of double marginalisation, the elimination of transactions costs
8 See, J Kwoka, ‘Merger Remedies: An Incentives/Constraints Framework’, The Antitrust Bulletin, Vol 62(2),
2017, p. 369 (‘Conduct remedies permit the merger to take place, but then subject the firm to conditions
intended to prohibit specified anticompetitive conduct or to require continuation of specified conduct
necessary to preserve rivals. Importantly, these conditions do not alter in any way the merged firm’s
incentives to maximize profit by engaging in competitively problematic behavior. Rather, they operate
in an entirely different manner, essentially seeking to prevent the firm from acting on those unchanged
incentives.’).
9 The merging firms may also object to such a remedy because of onerous monitoring requirements and
the restriction on the firm’s flexibility in setting its prices and responding to market conditions.
10 ‘Antitrust Division Issues Updated Merger Remedies Guide’, DOJ press release accompanying the DOJ
2011 Policy Guide (hereinafter, ‘Press Release with DOJ 2011 Policy Guide’); FTC 2012 Remedies Guide,
p. 5; OECD Policy Roundtables: Remedies in Merger Cases 2011, pp. 222–223 (the OECD Roundtable).
11 Press Release with DOJ 2011 Policy Guide and Antitrust Division Policy Guide to Merger Remedies, US
Department of Justice, Antitrust Division, October 2004 (the DOJ 2004 Policy Guide), p. 7 (‘in some cases
the remedy may require both structural and conduct relief.’).
12 FTC 2012 Remedies Guide, p. 5; OECD Roundtable, pp. 223–224. Some mergers have both horizontal and
vertical features and potentially raise the competitive concerns of both types of mergers.
28

between the upstream and downstream firms, and, more generally, improved coordination on
the production and sale of complementary products.13 At the same time, a vertical merger that
involves particularly important assets may raise competitive concerns that the combined firm
will foreclose (or significantly raise the cost of ) rivals’ access to either the upstream or down-
stream product. A structural remedy that involves divestment of the upstream or downstream
product of concern would eliminate the competitive concern but also eliminate the efficiencies
from the vertical combination. In such a case, if there were a less extensive remedy that could
maintain efficiencies while making competitive harm less likely, this would likely improve net
consumer benefits relative to the divestment.
In theory, a relatively simple behavioural commitment by the merged firm to continue to
supply rivals would make competitive harm less likely while retaining the potential gains from
vertical integration by removing double marginalisation or other benefits of improved coordi-
nation. However, while they are in theory easy to monitor, in practice such commitments can
still raise issues. For example, a commitment to supply rivals still requires an understanding of
what price rivals will pay. In addition, circumstances may change that would result in a legiti-
mate reason for the supply relationship to end, but the remedy may not be flexible enough to
allow that outcome. In some cases, such concerns may be dealt with by use of an arbitration
provision, allowing a neutral third party to assess whether post-merger behaviour is consistent
with pre-merger incentives. As noted, statements by Makan Delrahim, the Assistant Attorney
General for the Antitrust Division of the DOJ, have expressed concerns with non-structural
remedies even in vertical matters.14 This has raised questions about whether DOJ and FTC might
take different approaches to merger remedies in vertical cases.15 Whether the commitments,
even if imperfect, are preferable to blocking the transaction depends on the potential costs from
the commitments relative to efficiencies that can be achieved from allowing the transaction to
proceed. The district court and appellate decisions in the AT&T/Time Warner merger case both
considered the non-structural commitment offered by the parties (which had been rejected by
DOJ).16
13 See, e.g., Dennis Carlton and Jeffrey Perloff (2005), Modern Industrial Organization, 4th ed., p. 5.
14 ‘Assistant Attorney General Makan Delrahim Delivers Remarks at the Federal Telecommunications
Institute’s Conference in Mexico City.’ 7 November 2018, available at www.justice.gov/opa/speech/
assistant-attorney-general-makan-delrahim-delivers-remarks-federal-institute, site visited
3 September 2019. ‘Assistant Attorney General Makan Delrahim Delivers Keynote Address at American
Bar Association’s Antitrust Fall Forum,’ 16 November 2017, available at www.justice.gov/opa/speech/
assistant-attorney-general-makan-delrahim-delivers-keynote-address-american-bar, site visited
3 September 2019.
15 See, e.g., Kenneth B. Schwartz, et al., ‘US and EU Antitrust Enforcers Remain Active and Aggressive, With
Some New Wrinkles,’ Skadden’s 2019 Insights, 17 January 2019, available at https://www.skadden.com/
insights/publications/2019/01/2019-insights/us-and-eu-antitrust-enforcers-remain-active, site visited
17 July 2019 (‘The FTC has not adopted the DOJ’s hard line on behavioral remedies.’).
16 Decision of the United States Court of Appeals for the District of Columbia Circuit, No. 18-5214, United
States of America, Appellant v. AT&T, Inc., et al., Appeals decided 26 February 2019, pp. 22-23.
29

Economic issues to consider when analysing whether a proposed

self-enforcing remedy restores competition in theory and practice
According to the 2011 DOJ Policy Guide, an appropriate merger remedy protects competition:
‘The Division’s central goal is preserving competition, not determining outcomes or picking
winners and losers.’17 Noting that remedy assessment is a fact-intensive exercise, the DOJ Policy
Guide instructs that remedies should be evaluated with a ‘careful application of legal and eco-
nomic principles to the particular facts of a specific case’18 and there should be a clear, logical
link between the remedy and the alleged harm that the proposed merger would impose.19 The
2012 FTC Remedies Guide and OECD Roundtable express similar ideas.20
What, if any, remedy will work in both theory and practice depends, of course, on the nature
of the industry at issue and the specific competitive concern. In this section, we focus on
whether the remedy is likely to restore competition to pre-merger levels – as we discuss in the
next section, a remedy that does not perfectly restore competition to pre-merger levels may still
be preferred to blocking the transaction as it would allow the efficiencies associated with the
transaction to be realised as long as the remedy is likely to result in net benefits. In this section,
we discuss several economic considerations in evaluating whether a potential self-enforcing
remedy is likely to restore competition to its pre-merger level, namely:
• What is the nature of competition pre-merger?
• What is the alleged competitive harm, how significant is this harm likely to be, and how long
will it last?
• How will potential remedies restore competition in theory, and if there are multiple poten-
tial remedies, how do they compare?
• Are there impediments to implementing the potential remedies?
With many structural remedies, the goal of the enforcement agency is often to recreate the com-
petitor lost from the merger. In certain situations, this should be easy: if the product/geography
at issue is a stand-alone business that has little reliance on the rest of the company (other than
potentially sharing corporate resources), divesting that complete business to another firm
(which can also offer corporate resources) is likely to restore competition as it was prior to the
divestiture.21
In many cases, however, determining the appropriate remedy can be more complex as
there are often many components to the production, marketing and sale of products. Moreover,
the production, sales and marketing of one product can be related to other products. That is,
the presence of scope economies may influence the likelihood that the remedy will be effec-
tive. Scope economies refer to the reduced marginal or incremental cost of production from
17 DOJ 2011 Policy Guide, p. 3. As explained by the DOJ, attempts to protect individual competitors
ultimately can harm competition by suppressing firms’ incentives to compete. Also see DOJ 2004 Policy
Guide, pp. 4,5.
18 DOJ 2011 Policy Guide, p. 2. Also see DOJ 2004 Policy Guide, p. 3 (‘Remedies Must Be Based upon a
Careful Application of Sound Legal and Economic Principles to the Particular Facts of the Case at
Hand.’).
19 DOJ 2011 Policy Guide, p. 4. Also see DOJ 2004 Policy Guide, p. 3 (indicating there should be a ‘close,
logical nexus between the recommended remedy and the alleged violation’).
20 FTC 2012 Remedies Guide, p. 1; OECD Roundtable, p. 222.
21 FTC 2012 Remedies Guide, p. 5; DOJ 2011 Policy Guide, pp. 8–9 ; DOJ 2004 Policy Guide, p. 12.
30

increasing the breadth of products produced or distributed. The importance of scope econo-
mies for a particular merger may influence whether divesting more (or less) of an existing busi-
ness will be sufficient to preserve competition prior to the merger. In an industry where offer-
ing a ‘full line’ of products is important to be an effective competitor, the agencies may seek
a divestiture that includes more than the existing business encompassing the products in the
relevant markets at issue in order to ensure that the purchaser has a sufficient range of products
to compete.22 The FTC’s recent retrospective study of merger remedies found several instances
in which purchasers of divested assets faced limitations in their ability to compete because of
the narrow scope of the asset package.23 Thus what is included in a divestiture remedy and who
is the buyer are important considerations.
What is included in the remedy

We consider two examples to show what issues may arise when determining what should be
included in remedies.
Example 1: Retail mergers

Consider a merger of two retailers that raises competitive concerns regarding a limited number
of stores within a subset of geographies impacted by the merger. The seemingly obvious solu-
tion to these competitive concerns would be to divest the stores of one or the other of the parties
in each location to a third-party buyer and thus restore competition. However, this raises several
potential issues as to whether the new buyer is likely to be an effective competitor. For example:
• Can the store location be readily transferred – do the parties own the location or is it leased
and, if leased, what is the length of the lease and is it transferable?
• Will the buyer be able to obtain products to sell at the retail store at costs similar to those
enjoyed by the current owner?
• Does the new buyer want or need access to the brand name of the previous retailer?
Example 2: Intermediate manufactured goods

Now consider a merger of two manufacturers of an intermediate good that is used in the manu-
facture of other items. Assume that the merging parties are two of a small number of suppliers
of the intermediate good. Again, the ‘easy’ remedy would be to divest one of the merging parties’
manufacturing facilities associated with the intermediate good. However, this solution may
also raise other issues. For example:
• Is the intermediate good made in a stand-alone factory or is it part of a factory that produces
more goods than just the good at issue? If so, is there a practical way to divide up the assets?
22 DOJ 2011 Policy Guide, p. 10 (‘Where divestiture of an existing business entity is insufficient to resolve
the competitive issues raised by the proposed merger, additional assets from the merging firms will
need to be included in the divestiture package. For example, in some industries, it is difficult to compete
without offering a “full line” of products. In such cases, the Division may seek to include a full line of
products in the divestiture package, even when its antitrust concern relates to only a subset of those
products.’). See also DOJ 2004 Policy Guide, p. 14.
23 The FTC’s Merger Remedies 2006–2012: A Report of the Bureaus of Competition and Economics,
January 2017, p. 23.
31

• Does the buyer have sufficient skill and knowledge to run the manufacturing facil-
ity effectively?
• How is the product sold and marketed? What assets are required for sales and marketing?
What customer relationships and contracts exist? Are contracts transferable?
• Is there a brand name? Will it be transferred?
Who is the buyer?

Another key consideration is the identity and characteristics of the buyer, as we briefly touched
on above. A divestiture to a buyer that is already a significant competitor in the relevant market
may not solve the competitive concerns engendered by the merger. If the buyer is not already
a competitor in the relevant market, however, then there may be concerns about whether the
buyer will be effective at restoring the lost competition. Buyers who already participate in the
relevant market but who are small and not already a significant competitive constraint on the
merged firm may be acceptable. This is because such a buyer is not already an important com-
petitive factor in the industry but may be able to use the assets more effectively to become a
strong competitor than an outside buyer could.
In addition, the identity of the buyer may impact what should be included in the divestiture
package. For example, in a retail context, a buyer who already has retail outlets in other geog-
raphies may not need a brand name or, if the geographies are nearby, may not require distri
bution centres. This may also mean that the buyer already has the requisite scale to be effective.
Similarly, in the manufacturing context, the buyer may already have production facilities that
are well suited to make the product at issue or may only require a subset of assets to begin pro-
duction. All of this suggests knowing the identity and capabilities of the buyer is important to
crafting the appropriate divestiture package. As a result, the enforcement agencies frequently
require that a buyer be identified before the divestiture package is finalised.
Another economic issue arises to the extent the merging parties have an incentive to pro-
pose marginally acceptable, ‘weak’ buyers to undermine the antitrust enforcement agency’s
attempt to restore pre-merger competition. The economics underlying this concern is straight-
forward. To the extent the proposed buyer is a weak competitor, a weaker post-merger competi-
tor replaces a stronger pre-merger competitor. Competition overall is therefore softened, to the
benefit of the merging parties and other competitors in the relevant antitrust market, and to the
detriment of competition and consumers. According to studies of merger remedies conducted
by the FTC, merging parties have been less likely in recent years to propose marginally accept-
able buyers.24
24 The FTC’s Merger Remedies 2006–2012: A Report of the Bureaus of Competition and Economics,
January 2017, p. 24 (‘The 1999 Divestiture Study revealed that respondents sometimes proposed
marginally acceptable buyers unlikely to offer robust competition. This study shows that respondents
are now proposing stronger buyers that, in most cases, fully satisfy the Commission’s criteria. Overall,
respondents proposed buyers that were familiar with the market, dealt with many of the same
customers and suppliers, had developed thoughtful business plans with realistic financial expectations
and sufficient backing, and were well received by market participants.’).
32

Trade-offs between restoring competition and preserving efficiencies

If one focused solely on the competitive concerns related to a transaction, the goal of the merger
remedy is to restore the market to the level of competition prior to the merger – i.e., remove
the risk of harm to competition from the market as much as possible. The least risky way to
achieve this outcome would be to block the transaction entirely. However, such an approach
would negate any potential benefits from the transaction.
From an economic perspective, developing a remedy should require careful balancing
between removing the competitive harm from the transaction while at the same time main-
taining potential benefits of the transaction. How this balance should be made depends on:
(1) how certain and large is the potential competitive harm from the transaction; (2) how cer-
tain and large are potential benefits from the transaction inside and outside the relevant mar-
kets; and (3) what remedies are available, how readily they address the competitive harm and
how they impact the potential benefits from a transaction. As we discussed above, antitrust
enforcers typically focus on whether the proposed remedy removes the competitive harm as
completely as possible from areas affected by the transaction, frequently because the benefits
from the transaction outside of these areas, particularly for consumers, are less well defined.
However, their willingness to consider remedies at all – and in some cases more creative rem-
edies – implicitly recognises that there is a downside to blocking a transaction or always requir-
ing the most risk-free remedy. We believe that from an economic perspective the effect of a pro-
posed remedy on efficiencies, whether within the product markets at issue or outside of them,
should be given more explicit consideration by antitrust enforcers.
Consider the potential for efficiencies specific to the products at issue. If an antitrust agency
chooses to challenge a merger then it must believe there will be a net competitive harm in the
market at issue, accounting for the potential efficiencies; that is, the expected competitive harm
is larger than the expected competitive gains from efficiencies in the market at issue. This result
could occur because of the relative sizes of the estimated gains and losses or because the harm
is judged to be less speculative than the gains. If the benefits from efficiencies are sizeable and
relatively likely – even if smaller than the expected harm from the transaction – consumers may
benefit if a remedy could be crafted that maintained the gains while lowering the size of the
potential harm, even if the harm is not reduced to zero.
As discussed above, it is well recognised that vertical mergers are likely to generate efficien-
cies. Moreover, the theory of harm from vertical mergers is not based on removal of direct com-
petition between the merging parties but rather on potential incentives to harm rivals through
foreclosure or raising rivals’ costs that may result in softened upstream or downstream compe-
tition. From an economic perspective, this suggests that even a remedy that does not eliminate
entirely the potential for competitive harm or requires ongoing monitoring may be preferable
to blocking the transaction (or requiring divestiture of the upstream or downstream product if
the merger involves more than just the products of concern), which eliminates the efficiencies
of the transaction. For example, in the Comcast/NBC-Universal merger, the DOJ consent order
included a provision whereby Comcast/NBC-Universal agreed to offer online video program-
ming distributors NBC-Universal programming on ‘economically equivalent’ terms to those
33

offered to traditional video distributors (with the possibility of arbitration if the parties failed to
reach an agreement).25 However, as discussed above, DOJ rejected a similar provision offered by
the parties in AT&T/Time Warner.
Now consider efficiencies outside the markets at issue. In some cases, crafting the remedy
may have an impact on efficiencies that can be generated from other areas. For example, if the
products at issue are produced in plants that make other products, then a remedy for the prod-
ucts at issue that divests the entire plant and all of the associated businesses could result in lost
efficiencies for the divested business other than the products at issue. If so, consumers could
be worse off than with a more limited remedy, even if that remedy created some risk of less-
ened competition in the markets at issue. An alternative remedy, for instance, might involve
the buyer leasing space, machinery and other infrastructure from the merged firm. While
this might raise competitive concerns as to whether the merged firm could act strategically to
undermine the buyer or increase the risk of coordination between the buyer and the merged
firm, taking this risk may be justified if it could preserve sizeable efficiencies in other product
areas.26 Importantly, such an approach would require the antitrust agencies and the parties to
develop an in-depth understanding of efficiencies outside of the areas at issue and how those
efficiencies are impacted by a proposed remedy.
25 J Kwoka, ‘Merger Remedies: An Incentives/Constraints Framework’, The Antitrust Bulletin, Vol 62(2),
2017, p. 371.
26 See, e.g., DOJ 2011 Policy Guide, p. 4 and DOJ 2004 Policy Guide, p. 4 acknowledging this concern
(‘Effective remedies preserve the efficiencies created by a merger, to the extent possible, without
compromising the benefits that result from maintaining competitive markets.’).
34

04
Realigning Merger Remedies with the Goals of Antitrust
Diana L Moss1
Introduction
The current focus on antitrust enforcement is supported by an important dialogue on evidence
of declining competition in the US economy.2 We do not yet know the full extent to which rising
concentration, slowing rates of start-ups and widening inequality gaps are the product of the
lax antitrust enforcement that has prevailed in US for three decades. As this story continues to
unfold, it remains clear that merger enforcement should be high on the antitrust agenda. The
US Department of Justice (DOJ) and Federal Trade Commission (FTC) are in unique positions to
learn from their past experience in merger enforcement, particularly with regard to the effec-
tiveness of their remedies. This commentary highlights the importance of merger remedies in
the broader debate over the role and goals of antitrust. It argues that a number of themes are
converging to create an inflection point in remedies policy. This puts the spotlight on the series
of very recent and controversial merger enforcement decisions under the Trump administra-
tion that are likely to have a strong and potentially detrimental influence on the policy trajec-
tory surrounding remedies.
One theme is a clearer emphasis on the role of antitrust in protecting competition and pro-
moting consumer welfare through the process and goals of law enforcement. Remedies policy
should be aligned with the mission and workings of antitrust, namely through the crafting of
1 Diana L Moss is president of the American Antitrust Institute.

2 See A National Competition Policy: Unpacking the Problem of Declining Competition and Setting
Priorities Moving Forward, American Antitrust Institute (28 September 2016), www.antitrustinstitute.
org/sites/default/files/AAINatlCompPolicy.pdf. See also Council of Economic Advisers, Benefits of
Competition and Indicators of Market Power (April 2016), https://obamawhitehouse.archives.gov/sites/
default/files/page/files/20160414_cea_competition_issue_brief.pdf.
35

effective remedies that deter anticompetitive conduct.3 A second development is the expanding
body of evidence on the success and failure of past merger remedies. Merger ‘retrospectives’ and
agency guidance reveal the limitations of both conduct (ie, behavioural) and structural fixes.
This evidence and experience should be reflected in remedies policy.
A third theme is the expanding number of cases where the agencies blocked or forced the
abandonment of a merger because an effective remedy could not be found. This highlights the
fact that the government’s move to block a merger is in itself an effective remedy , highlighted
by the more frequently encountered problem of ‘too big to fix’. We begin with some context for
revisiting merger remedies by summarising the major elements of the current debate over
antitrust and lessons learned from sector regulation, where remedies are also important. The
analysis then moves to the three themes described above: merger remedies as the product of
the law enforcement process; growing agency evidence and experience with remedies; and the
limitations of remedies in light of more recent cases.
Antitrust in context – framing the broader debate around merger remedies

The changing ideological spectrum
Policy surrounding merger remedies is embedded in the broader current debate over the appro-
priate role for antitrust enforcement in protecting competition and consumer welfare, promot-
ing economic growth, facilitating equity in the distribution of wealth and income, and spurring
innovation. The varying answers to these questions have stretched the ideological spectrum
around antitrust in the US, bringing into focus three current perspectives: conservative, popu-
list and progressive.
Conservatives generally argue that antitrust enforcement should take a light hand. They give
considerable deference to claims that mergers and some forms of restrictive conduct promote
cost savings, quality control, consumer benefits and other efficiencies. Conservative ideology
uses a broad lens through which to view the effects of potential or actual competitive abuses. For
example, mergers or conduct that purportedly generate efficiencies are believed to be pro-com-
petitive, even if they harm consumers through higher prices, lower quality or less innovation.4
Conservative thinking has strongly influenced merger remedies. Numerous large horizon-
tal mergers in highly concentrated markets have been allowed, with and without remedies,
even though such transactions were presumptively illegal under Section 7 of the Clayton Act.
Conservative thinking is also evident in vertical merger policy where the agencies have given
significant weight to the complex and often difficult to prove efficiencies claims arising from
vertical integration.5 As discussed later, this has resulted in the use of conduct remedies in a
number of high-profile vertical mergers.
3 For a full discussion of using merger remedies to promote general deterrence, see Steven C Salop,
Merger Settlement and Enforcement Policy for Optimal Deterrence and Maximum Welfare, 81 Fordham
L Rev 2647 (2013).
4 The conservative view is rooted in Chicago School thinking, which interprets the consumer welfare
standard more as a total welfare standard, under which potential violations are evaluated on the basis
of their effect on the totality of consumer and producer surplus.
5 Note that merger-related efficiencies can include cost savings and/or consumer benefits. The latter
are particularly difficult to substantiate as merger-specific and cognisable but have nonetheless been
accepted by the agencies in numerous merger proceedings, particularly airlines.
36

In the middle of the spectrum is progressivism, which encourages vigorous enforce-

ment under the full scope of the existing law and the prevailing consumer welfare standard.
Progressives highlight the ability of the consumer welfare standard to address both price and
non-price dimensions of competition such as quality and innovation. Any source of market
power (e.g., buyer or seller) is also reachable under the standard, which allows antitrust to
evaluate concerns in output and input markets, including labour.6 The progressive view also
acknowledges that antitrust enforcement is an important tool in a ‘toolkit’ that includes other
policies for promoting competition and protecting consumers.
On the question of merger remedies, progressive thinking recognises the limitations of
regulatory-style conduct fixes and structural remedies that target specific assets, as opposed
to lines of business. In promoting vigorous enforcement, progressives support the ‘structural
presumption’ that a merger in a highly concentrated market will almost certainly harm compe-
tition and consumers. The most effective remedy for mergers in such cases may therefore be for
the government to move to block the merger.
At the left end of the spectrum is a neo-populist ideology focused generally on the inad-
equacy of the antitrust laws and consumer welfare standard.7 Populists are relatively new to
the debate and have a major focus on monopoly and the the online technology companies. They
have advocated recently for breaking up some of the large online technology companies using
antitrust as a major tool.
Relative to progressivism, conservatism has arguably resulted in long-term under-
enforcement of the antitrust laws, whereas populism seemingly seeks to use the antitrust laws
to achieve broader policy goals than for which they were designed.
Learning from the antitrust regulation partnership

The debate over merger remedies is informed by the role of antitrust as part of the broader
toolkit of policy instruments that promote competition and consumer welfare. This includes
trade, regulation, labour, consumer protection and privacy, education, and small business pol-
icy. There is a particularly important and established partnership between antitrust enforce-
ment and sector regulation that can usefully inform remedies policy. Each works in different
ways – antitrust through law enforcement, and sector regulators (as administrative agencies)
through promulgating and implementing standards and rules that govern how the underlying
laws will be enforced.
Antitrust and regulation often work in tandem to reach competitive issues that the other
cannot address.8 For example, the Federal Energy Regulatory Commission can find strategic
withholding of generation capacity for the purpose of driving up electricity prices a violation
6 See, e.g., The Consumer Welfare Standard in Antitrust: Outdated or a Harbor in a Sea of Doubt? Hearing
Before the United States Senate Committee on the Judiciary Subcommittee on Antitrust, Competition
and Consumer Rights, 115th Cong (2017) (statement of Diana L Moss, President, American Antitrust
Institute), www.antitrustinstitute.org/sites/default/files/Moss_SJC%20Sub-comm%20Hearing_
Consumer%20Welfare_12.13.17.pdf.
7 See, e.g., Alexei Alexis, Hipster Antitrust Comes Under Senate Spotlight, Bloomberg Law
(13 December 2017), www.bna.com/hipster-antitrust-comes-n73014473208/.
8 The differences between antitrust and regulation are significant, procedurally and substantively. See
e.g., Diana L Moss, Antitrust Versus Regulatory Merger Review: The Case of Electricity, 32 Rev Ind Org
32 241 (2008).
37

of ‘just and reasonable’ rates.9 Capacity withholding that does not involve exclusion of rivals
or an anticompetitive agreement, however, is not reachable under the antitrust laws. Antitrust
and regulation also employ different standards, which can capture a variety of adverse effects.
Antitrust focuses exclusively on promoting competition and consumer welfare. Regulation
also pursues harm to competition, but also other objectives under a public interest standard,
including reliability of service, safety, diversity (e.g., media) and even employment. The Federal
Communication Commission’s now rescinded net neutrality rules reflected the goals of a
broader public interest agenda to promote an open internet, competition, and diversity in con-
tent and distribution.10
Antitrust and sector regulators can diverge significantly on merger remedies. Regulation
almost universally employs conduct remedies that encompass complex rules and require-
ments, often involving long-term commitments that necessitate ongoing interaction between
the regulator and regulated firm.11 As administrative agencies, sector regulators are well suited
to oversight and compliance enforcement, which may allow them to monitor markets and
shape future agency policy. But such remedies also open the door to regulatory capture and
market distortions from ‘second-best’ fixes.12 In contrast, the antitrust agencies have histori-
cally favoured structural remedies. These involve a one-time fix through a permanent reduction
in a firm’s incentive or ability to exercise market power. They also place significantly less burden
on the agencies and courts, which are not well suited to monitoring and compliance.
Merger remedies and deterrence value

Antitrust remedies deter illegal anticompetitive conduct
The antitrust agencies enforce the antitrust laws through a process of discovery, investigation
and deterrence of violations. The agencies have a number of remedies at hand, including injunc-
tions and disgorgement in civil cases, fines and incarceration in criminal cases brought by the
DOJ, and civil penalties for decree violations. Enforcement against anticompetitive agreements
(e.g., cartels) through Section 1 of the Sherman Act is perhaps the best illustration of antitrust as
law enforcement, where the optimal deterrence value of penalties is a central focus.
A small but important case illustrates the concept of antitrust as law enforcement. The
DOJ’s settlement in Gunnison Energy and SG Interests Inc levied minimal damages on two
companies for rigging bids for natural gas leases on public land in Colorado. Dozens of public
9 This was the root problem during the California energy crisis of 1999-2000. See, e.g., Attorney
General Bill Lockyer, Attorney General’s Energy White Paper: A Law Enforcement Perspective on the
California Energy Crisis (2004), https://oag.ca.gov/sites/all/files/agweb/pdfs/antitrust/publications/
energywhitepaper.pdf. See also 16 US Section 791a (2018).
10 Protecting and Promoting the Open Internet, 80 Fed Reg 19,738 (13 April 2015). In contrast, antitrust
cannot police restrictive conduct involving internet access until after it occurs. And even then, the
subtlety of some forms of exclusion might fall outside the ambit of antitrust. See, e.g., American
Antitrust Institute, Repeal of Network Neutrality Eliminates Important Antitrust-Regulation
Partnership, Deprives Competition and Consumers of Needed Safeguards (22 December 2017), www.
antitrustinstitute.org/sites/default/files/AAI_Net%20Neutrality%20Repeal%20Comm_F.pdf.
11 See, e.g., Ohio Edison Co., et al., 81 FERC para. 61,110 (1997), https://ferc.gov/industries/electric/gen-info/
mergers/mergers-1997.asp. The Commission’s policy in the 1990s generally required that merging
utilities open their transmission systems to access by rivals.
12 See, e.g., R G Lipsey and Kelvin Lancaster, The General Theory of Second Best, 24 Rev Econ Stud 11 (1956).
38

comments highlighted the inadequacy of the penalty. Judge Matsch agreed. He denied a motion
for entry of a final judgment under the Antitrust Policies and Procedures Act (the Tunney Act),13
noting ‘There is no basis for saying that the approval of these settlements would act as a deter-
rence [sic] to these defendants and others in the industry . . . ’14
Mapping the deterrence value of remedies to merger enforcement

The role of antitrust enforcement in deterring anticompetitive behaviour maps directly over to
merger remedies, at least as to ‘specific deterrence’ or deterring future violations by a defend-
ant.15 Once an enforcement action for a violation under Section 7 has been brought, an effective
remedy must follow. The DOJ’s 2011 Policy Guide to Merger Remedies (guidelines) state that a
remedy ‘must effectively preserve competition in the relevant market’, which should be ‘under-
stood to include the concept of restoring competition or enhancing consumer welfare’.16 In
September 2018, the Assistant Attorney General for antitrust at the DOJ withdrew the 2011 guide-
lines and placed the 2004 Policy Guide to Merger Remedies back into effect.17 However, the
goal of crafting effective remedies to preserve competition remains the same in the 2004 and
2011 guidelines. A remedy must therefore address the elements through which consumer wel-
fare can be diminished by an illegal merger, including adverse price effects and other non-price
dimensions of competition, such as reduced quality and innovation.
As an integral part of law enforcement, an effective remedy should deter anticompetitive
behaviour after a merger is consummated. However, the major differences among merger rem-
edies raise questions about whether they actually deter illegal behaviour. For example, in some
cases, the most effective remedy is the agency’s request for a permanent injunction to block a
merger. Short of this, the agencies have used behavioural and structural remedies to address
competitive concerns. But in many cases, such remedies do not align closely with the goal of
deterrence, revealing a divergence from antitrust as law enforcement.
Federal judges have expressed reservations about the deterrence value of remedies in only
a limited number of Tunney Act reviews.18 Otherwise, consent orders have been routinely
approved. The limited historical role of the Tunney Act review process highlights the notion that
judicial review of a consent order under the Tunney Act should not be the first line of defence
to a merger remedy that falls afield of the goal of law enforcement. Effective remedies that deter
13 15 USC Section 16(e)(1) (2018).

14 United States v. SG Interests I Ltd, No. 12-cv-00395-RPM, 2012 WL 6196131, at *6 (D Colo,
12 December 2012).
15 Supra note 3.
16 US Dep’t of Justice, Antitrust Division Policy Guide to Merger Remedies 2 (June 2011), www.justice.gov/
atr/public/guidelines/272350.pdf.
17 US Dep’t of Justice, Antitrust Division Policy Guide to Merger Remedies (October 2004), www.justice.
gov/atr/public/guidelines/272350.pdf.
18 15 USC Section 16(b)–(h). See, e.g., United States v. Comcast Corp, 808 F Supp 2d 145, 149 (DDC 2011).
See also United States v. CVS Health and Aetna Inc., United States’ Motion To Clarify And Amend The
Court’s Planned Tunney Act Procedure, Case No. 1:18-cv-02340-RJL (DDC 19 April 2019). The judge in this
case took the unusual step of calling a hearing to consider the remedy proposed by the government to
address horizontal concerns but also vertical concerns that were not identified in the complaint.
39

anticompetitive conduct should be considered as a major policy goal. The former Assistant
Attorney General for Antitrust under the Obama administration, William Baer, explained
‘Getting remedies right is central to merger enforcement policy.’19
Realigning merger remedies with the goals of antitrust

The tension in agency remedies policy
Agency policy regarding the goals of merger remedies has remained consistent over time.
For example, the 2011 DOJ remedies guidelines explain, ‘The touchstone principle for the
Division in analyzing remedies is that a successful merger remedy must effectively preserve
competition in the relevant market.’20 The guidelines note that remedies include blocking a
merger or settling to avoid a contested litigation. But when a merger is allowed to proceed with a
remedy, consumer welfare must be protected.21 This approach to merger remedies is consistent
with antitrust as law enforcement, namely to deter future anticompetitive behaviour.
While the DOJ and FTC have consistently articulated the goals of merger remedies, the
agencies’ policies governing how remedies achieve them have changed over time. This reflects
an ongoing tension in the balancing of theory and practice. For example, the DOJ’s 2004 rem-
edies guidelines stated that structural remedies were preferred to behavioural fixes. Those
guidelines state: ‘They [structural remedies] are relatively clean and certain, and generally
avoid costly government entanglement in the market. A carefully crafted divestiture decree is
“simple, relatively easy to administer, and sure” to preserve competition.’22
Between 2009 and 2011, however, the DOJ challenged a number of high-profile vertical
merger cases and largely settled them with conduct remedies. These included Comcast/NBCU,
Live Nation/Ticketmaster and Google/ITA.23 In 2011, the DOJ rewrote the remedies guidelines
to put less emphasis on structural and more emphasis on conduct remedies. Presumably this
codified the agency’s approach to vertical merger enforcement at the time, which gave consid-
erable deference to efficiencies claims arising from vertical integration. Even so, the 2011 rem-
edies guidelines state that merger-related efficiencies are of secondary importance to restoring
19 Acting Associate Attorney General Bill Baer Delivers Remarks at American Antitrust Institute’s 17th
Annual Conference (16 June 2016), https://www.justice.gov/opa/speech/acting-associate-attorney-gene
ral-bill-baer-delivers-remarks-american-antitrust-institute.
20 US Dep’t of Justice, Antitrust Division Policy Guide to Merger Remedies 1 (June 2011), www.justice.gov/
atr/public/guidelines/272350.pdf.
21 Id. at 4.
22 US Dep’t of Justice, Antitrust Division Policy Guide to Merger Remedies 7–8 (October 2004) (quoting
United States v. E I du Pont de Nemours & Co, 366 US 316, 331 (1961)), www.justice.gov/atr/public/
guidelines/272350.pdf.
23 See [Proposed] Final Judgment at Sections IV-VI, United States v. Comcast Corp, No. 1:11-cv-00106 (D DC
31 January 2011), www.justice.gov/atr/case-document/proposed-final-judgment-76; [Proposed] Final
Judgment, United States v. Ticketmaster Entm’t Inc, No. 1:10-cv-00139 (D DC 29 June 2010), www.justice.
gov/atr/case-document/proposed-final-judgment-248; [Proposed] Final Judgment, United States v.
Google Inc,
No. 1:11-cv-00688 (D DC 8 April 2011), www.justice.gov/atr/case-document/file/497661/download.
40

competition, explaining that a remedy ‘preserve[s] the efficiencies created by a merger, to the
extent possible, without compromising the benefits that result from maintaining competitive
markets’.24
The growing divide between conduct and other remedies

The DOJ’s policy transition in the 2011 remedies guidelines raised many questions that remain
in force, regardless of which version of the remedies guidelines the DOJ follows. For example,
the behavioural remedies contained in numerous consent orders are well known to be fraught
with problems that directly affect their deterrence value.25 They articulate prohibited, permitted
and required conduct – requirements that do nothing to change the merged firm’s incentives
to exercise market power and encourage circumvention of the rules. Conduct remedies also
depend on smaller market participants, under the weak protection of anti-retaliation provi-
sions, coming forth to lodge complaints about non-compliance.
Conduct remedies are thus oriented around a ‘design’ standard, namely compliance with
the requirements of the remedy. This stands in stark contrast to structural remedies that are
shaped around a ‘performance’ standard, or an ‘obligation in terms of ultimate goals that must
be achieved’.26 Conduct remedies thus carry a higher risk of failure, a risk that is more likely to
be shouldered by consumers, not the merging parties.27 One reason for this is that conduct rem-
edies require ongoing monitoring and enforcement by the agencies and the courts, which are
not, as noted earlier, well suited to act as regulators.
For example, in the Tunney Act review in Comcast/NBCU, Judge Leon expressed misgivings
about the effectiveness of the proposed behavioural remedy, stating: ‘because of the way the
Final Judgment is structured, the Government’s ability to “enforce” the Final Judgment, and,
frankly, this Court’s ability to oversee it, are, to say the least, limited’.28 Judge Leon went on to
say that ‘the Government, at the public hearing, freely admitted that “[w]e can’t enforce this
decree.”’29 In the merger of ABInBev/Miller Coors, numerous parties filed amicus briefs as part
of the Tunney Act review process. They emphasised the drawbacks of the conduct remedy in
24 US Dep’t of Justice, supra note 16, at 4 (emphasis added).

25 See John E Kwoka and Diana L Moss, Behavioral Merger Remedies: Evaluation and Implications for
Antitrust Enforcement, 57 Antitrust Bull 979, 994, 1010 (2012). See also, John E Kwoka Jr, Does Merger
Control Work? A Retrospective on Enforcement Policy, Remedies, and Outcomes 78 Antitrust L J 619, 636
(2013); Delrahim, supra note 18.
26 See, e.g., Steven C Salop, Modifying Merger Consent Decrees to Improve Merger Enforcement Policy,
31 Antitrust 15 (2016).
27 See, e.g., Bill Baer, Responses of Assistant Attorney General Bill Baer to Questions Submitted for the
Record Senate Judiciary Committee Subcommittee on Antitrust, Competition Policy, and Consumer
Rights Hearing: ‘Oversight of the Enforcement of the Antitrust Laws’ (9 March 2016), www.judiciary.
senate.gov/imo/media/doc/Baer%20Responses%20to%20QFRs.pdf; D. Bruce Hoffman, Acting Director,
Bureau of Competition, US Fed Trade Comm’n, It Only Takes Two to Tango: Reflections on Six Months
at the FTC, 6-7 (2 February 2018), www.ftc.gov/system/files/documents/public_statements/1318363/
hoffman_gcr_live_feb_2018_final.pdf.
28 United States v. Comcast Corp, 808 F Supp 2d 145, 149 (DDC 2011).
29 Id. (Brackets in original.)
41

the consent order, which is designed to constrain ABInBev/Miller Coors’ powerful incentives to
favour the distribution of its own products over smaller rivals.30 These cases reflect the concern
that an unenforceable or hard-to-monitor consent order has questionable deterrence value.
Because structural remedies permanently change the merged firm’s ability or incentive
to exercise market power they require less, if any, ongoing monitoring and enforcement after
a successful transition of divested assets to a viable buyer. But some structural remedies are
not bulletproof either. For example, the FTC has experienced problems with some structural
remedies involving divestitures of targeted assets. In the merger of retail grocers Safeway and
Albertsons, the FTC-approved sale of almost 150 stores to a regional west coast grocer (Haggen)
led to the failure and shuttering of the divested stores only a few months later.31 In Hertz-Dollar
Thrifty, the buyer of the divested assets (Advantage Rent-a-Car) filed for bankruptcy soon after
the sale.32 And despite divestitures in the UnitedHealth/Sierra and the Aetna/Prudential merg-
ers, analysts have documented post-merger premium increases.33
Incorporating agency experience and learning into policy

Lawmakers have not been shy about highlighting instances in which merger remedies have
been ineffective. At a December 2017 Senate Judiciary Committee hearing on the consumer
welfare standard, for example, Senator Richard Blumenthal highlighted concerns over the
Comcast/NBCU consent order, suggesting reopening the investigation to consider extending
the behavioural conditions or perhaps unwinding the transaction.34 Senator Blumenthal’s
statement highlights the importance of agency learning as a vital component of rebalancing
the goals and effectiveness of merger remedies.
30 Court Asks Justice Department to Respond to All Amicus Briefs in ABI-SABMiller Merger, Alcohol L
Rev (18 January 2018), http://alcohollawreview.com/justice-department-clear-abinbev-purchase-of-
sabmiller-
with-conditions/.
31 Press Release, Fed. Trade Comm’n, FTC Requires Albertsons and Safeway to Sell 168 Stores as a
Condition of Merger (27 January 2015), www.ftc.gov/news-events/press-releases/2015/01/ftc-requires-
albertsons-
safeway-sell-168-stores-condition-merger; Brent Kendall, Haggen Struggles After Trying to Digest
Albertsons Stores, Wall St J (9 October 2015), www.wsj.com/articles/haggen-struggles-after-tryin
g-to-digest-albertsons-
stores-1444410394.
32 Press Release, FSNA, Franchise Services of North America Inc. Announces Bankruptcy Filing by Simply
Wheelz LLC (4 November 2013), www.fsna-inc.com/newspdfs/115201391920.PDF.
33 See, e.g., Jose R Guardado, David W Emmons and Carol K Kane, The Price Effects of a Large Merger of
Health Insurers: A Case Study of UnitedHealth-Sierra, 1 Health Mgmt Pol’y 16 (2013); Leemore Dafny,
Mark Dugga and Subramaniam Ramanaraynan, Paying a Premium on your Premium? Consolidation in
the US Health Insurance Industry, 102 Am Econ Rev 1161 (2012).
34 See Ted Johnson, Senator Asks DOJ to Take Another Look at Comcast-NBCUniversal Merger, Variety
(13 December 2017), www.heritage.org/technology/commentary/time- repeal-the-ftcs-common-carrier-
jurisdictional-exemption-among-other.  
42

Merger retrospectives, or studies of post-merger outcomes, are being performed with

more frequency than ever before.35 They demonstrate that in many cases consummated merg-
ers have harmed consumer welfare through higher prices. And empirical ‘meta-analysis’ of a
large number of merger retrospectives demonstrates that divestitures often fail to resolve com-
petitive problems.36 These are needed tools for improving merger enforcement, including the
effectiveness and deterrence value of merger remedies. Proposed legislation by Senator Amy
Klobuchar would formalise the needed collection and study of post-merger data to improve the
effectiveness of merger remedies.37
To the agencies’ credit, both the DOJ and FTC appear receptive to periodically studying their
remedies and updating their guidance. The FTC has performed two major studies of its divesti-
ture remedies – one in 1999 and an update in 2017.38 The latter study revealed important obser-
vations, including that targeted asset divestitures are much less effective than line of business
divestitures. The report noted ‘all of the divestitures involving an ongoing business succeeded.
Divestitures of limited packages of assets in horizontal, non-consummated mergers fared less
well . . . .’39
As discussed above, a number of failed FTC merger remedies have revealed the limitations
of structural remedies. It remains to be seen, however, how the implications of the FTC’s recent
divestiture study are incorporated into future enforcement or how any change in DOJ remedies
policy will be reflected in agency guidance. Will there be more attempts to block illegal mergers
and increased reliance on structural remedies? Will we see more line-of-business divestitures,
as opposed to sales of targeted assets, in FTC enforcement actions where remedies are taken? If
the DOJ’s challenge to the AT&T/Time Warner acquisition is any indication, the answer appears
to be yes.
35 See, e.g., John Kwoka, The Structural Presumption and the Safe Harbor in Merger Review: False
Positives or Unwarranted Concerns? 81 Antitrust LJ 837, 860–61 (2017). See also, John Kwoka, Mergers,
Merger Control, and Remedies: A Retrospective Analysis of US Policy (2015). See also, e.g., Orley C
Ashenfelter Daniel S Hosken Matthew C Weinberg The Price Effects of a Large Merger of Manufacturers:
A Case Study of Maytag-Whirlpool, Working Paper 17476, National Bureau of Economic Research.
(October 2011)
www.nber.org/papers/w17476.pdf (finding price increases for dishwashers and relatively large price
increases for clothes dryers, but no price effects for refrigerators or clothes washers); and Nathan
H Miller and Matthew C Weinberg, Mergers Facilitate Tacit Collusion: Empirical Evidence from the
US Brewing Industry (25 March 2015) (finding that while the Miller/Coors joint venture resulted in
merger-specific cost reductions, average retail prices increased post-consummation, likely because of
tacit collusion).
36 Kwoka, supra note 24.
37 Merger Enforcement Improvement Act, S. 1811, 115th Congress Section 3 (2017).
38 FTC’s Merger Remedies 2006-2012, A Report of the Bureaus of Competition and Economics
(January 2017), www.ftc.gov/system/files/documents/reports/ftcs-merger-remedies-2006-2012-report-
bureaus-competition-economics/p143100_ftc_merger_remedies_2006-2012.pdf; A Study of the
Commission’s Divestiture Process, Bureau of Competition (Aug. 1999), www.ftc.gov/sites/default/files/
attachments/merger-review/divestiture.pdf.
39 FTC’s Merger Remedies 2006–2012, supra note 37, at 1.
43

Testing the limits of merger remedies: the problem of ‘too big to fix’
A number of recent, large horizontal mergers have been successfully blocked by the agencies
or abandoned in the face of government opposition. These include: Staples/Office Depot, Sysco/
US Foods, John Deere/Precision Planting, GE/Electrolux, Applied Materials/Tokyo Electron,
Halliburton/Baker Hughes and Anthem/Cigna.40 These deals share a number of characteris-
tics: highly concentrated markets, poor prospects for new entry, the absence of viable buyers
of potential divestiture assets, and complex business organisations. They illustrate that some
deals really are ‘too big to fix’ and should be blocked outright.
Notwithstanding the fact that a merger in a highly concentrated market is presumptively
illegal, resource-constrained enforcers are often enticed into fixes proposed by the parties ‘up
front’ as part of the merger deal. They should resist this pressure to settle.
A government move to block a merger is in itself a remedy. For a number of reasons, it is
often the one with the most deterrence value. First, viable buyers of divestiture assets may be
impossible to find, particularly in highly concentrated markets. Several cases illustrate this
problem, including the Safeway/Albertsons and the Hertz/Dollar Thrifty mergers, where buy-
ers failed to maintain the assets and subsequently exited the market. In mergers that were suc-
cessfully blocked by the government, including Sysco/US Foods, Staples/Office and Halliburton/
Baker Hughes, viable buyers of possible divestiture assets did not exist.
The lessons from the foregoing cases are clear. Divestitures to incumbents in the market
would essentially be a game of ‘musical chairs’, or shifting assets from one market incumbent
to another. This risks maintaining, or even increasing, post-merger levels of concentration.
Divestitures to a potential market entrant would more effectively dilute higher market concen-
tration or tighter vertical integration that follows large mergers. But such a buyer would need
to function independently (without the help of the merging parties), successfully maintain the
assets and quickly reinject the competition lost by the merger. Such entrants may be hard to
find, or even non-existent.
However, recent experience under the Trump administration’s antitrust chiefs signals sig-
nificant slippage in merger enforcement more generally, and remedies policy in particular. For
example, the FTC recently approved the merger of Staples and Essendant, the largest vertically
40 See Press Release, Fed Trade Comm’n, After Staples and Office Depot Abandon Proposed Merger
FTC Dismisses Case from Administrative Trial Process (19 May 2016), www.ftc.gov/news-events/
press-releases/2016/05/after-staples-office-depot-abandon-proposed-merger-ftc-dismisses; Press
Release, Fed Trade Comm’n, Statement of FTC Bureau of Competition Director Debbie Feinstein on
Sysco and US Foods’ Abandonment of Their Proposed Merger (29 June 2015), www.ftc.gov/news-events/
press-releases/2015/06/statement-ftc-bureau-competition-director-debbie-feinstein-sysco; Complaint,
United States v. Deere & Co, No. 1:16-cv-08515, at 16 and 18 (ND Ill 31 August 2016), www.justice.gov/
opa/file/889071/download; Press Release, US Dep’t of Justice, Electrolux and General Electric Abandon
Anticompetitive Appliance Transaction After Four-Week Trial (7 December 2015), www.justice.gov/opa/
pr/electrolux-and-general-electric-abandon-anticompetitive-appliance-transaction-after-four-week;
Press Release, US. Dep’t of Justice, Applied Materials Inc. and Tokyo Electron Ltd. Abandon Merger
Plans After Justice Department Rejected Their Proposed Remedy (27 April 2015), www.justice.gov/opa/
pr/applied-materials-inc-and-tokyo-electron-ltd-abandon-merger-plans-after- justice-department;
Complaint at 2, 30, 32, 36, United States v. Halliburton Co, No. 1:16-cv-00233-UNA (D Del 6 April 2016),
www.justice.gov/opa/file/838651/download; Complaint at 25, United States v. Anthem Inc, No. 1:16-cv-
01493 (D DC, 21 July 2016), www.justice.gov/atr/file/903111/download; see also, United States v. Anthem
Inc, No. 17-5024, at 12–13 (DC Cir 28 April 2017), www.justice.gov/atr/case-document/file/971316/download.
44

integrated US reseller of office products (and one of two retail office supply superstores) and larg-
est US wholesale distributor of office products, respectively. The FTC’s consent order requires
the companies to establish a firewall separating Staples’ business-to-business sales operations
from Essendant’s wholesale business to restrict Staples’ access to the Essendant’s customers’
commercially sensitive information.41 Firewalls are perhaps the more troubling form of behav-
ioural remedy in that they do nothing to reduce the firm’s incentive to exercise market power.
Incentives to ‘work around’ firewalls are strong and violations of the consent order would only
be detected by significant and ongoing monitoring of the merged firm’s internal operations.
Likewise, in the merger of wireless carriers Sprint and T-Mobile, rather than blocking a
harmful 4‑3 merger, the DOJ took a remedy. The package of divestitures and behavioural access
requirements would be handed off to a satellite television provider, Dish Network, which has no
experience in the wireless markets.42 The dubious viability of Dish Network as a buyer in this
case will be closely monitored should the merger survive judicial review, and if a parallel case
to block the merger brought by the states does not succeed. These decisions stand in contrast
to early messaging from the current Assistant Attorney General for Antitrust, Makan Delrahim,
who noted of conduct remedies, ‘[i]nstead of protecting the competition that might be lost in an
unlawful merger, a behavioral remedy supplants competition with regulation.’43
Second, the complexity of a remedy is likely to correlate with the complexity of a merger. A
potential buyer will inherit a diverse package of assets from players that are deeply entrenched
in the market. This often involves significant involvement in R&D and distribution, in addition
to production and marketing. Structural remedies in such situations are often accompanied by
conduct remedies such as limited-term supply agreements to increase the chances of a success-
ful transition from the merged company to the buyer. Remedies may also include licensing and
access provisions to ensure that the buyer has continued access to technology or distribution
controlled by the merged company.
A complex remedy is compounded by other problems that may be overlooked by enforcers.
For example, managers must simultaneously integrate two large business ecosystems post-
merger, while simultaneously undoing key businesses by spinning off assets. Moreover, they
must concurrently make good on their promises to deliver cost savings and consumer benefits.
Completing these tasks presses on the bounds of managerial competency at the same time they
create significant changes that are likely to affect profit incentives, relationships between affili-
ates and other key operational factors. Collectively, these factors affect post-merger operations,
conduct and strategy.
There is a commensurately higher risk that a complex merger remedy will not be executed
successfully. The government’s experience in Comcast/NBUC, Live Nation/Ticketmaster and
even in ABInBev/Miller Coors highlights this risk. The recent and historically large settlement
41 Sycamore Partners II L.P., Staples Inc., and Essendant, Inc., Federal Trade Commission,
Decision, Docket No. C-4667 (25, January 2019), https://www.ftc.gov/system/files/documents/
cases/1810180_staples_essendant_do_and_apps_a-g-redacted_public_version.pdf.
42 United States of America v. Deutsche Telekom Ag, T-Mobile Us, Inc., Softbank Group Corp., Sprint
Corporation, and Dish Network Corporation, Proposed Final Judgment, Case 1:19-cv-02232 (DDC
26 July 2019), www.justice.gov/opa/press-release/file/1187706/download.
43 Makan Delrahim, Asst Att’y Gen, Dep’t of Justice, Antitrust Div, Keynote Address at American Bar
Association’s Antitrust Fall Forum (16 November 2017), www.justice.gov/opa/speech/assistant-attorne
y-general-makan-delrahim-delivers-keynote-address-american-bar.
45

in the ‘too big to fix’ merger of Monsanto and Bayer raises the spectre of significant execu-
tion risk.44 The settlement notably includes potentially difficult to implement conditions that
appear designed to correct possible inadequacies in the remedy that might become apparent
post-merger.45 Complex remedies are therefore likely to conflict directly with the government’s
requirement that an effective remedy preserve competition and protect consumers.
Conclusion
This commentary has taken on the question of merger remedies at a time when concerns over
declining competition in the United States have intensified the debate over the role of antitrust
enforcement. It recognises the importance of antitrust as law enforcement. By extension, effec-
tive merger remedies should achieve the goals of law enforcement, namely to fully restore com-
petition and deter any anticompetitive post-merger conduct.
A growing body of evidence points in the direction of needed change in remedies policy.
This includes recognising problems with conduct remedies that focus on compliance and not
on performance. Likewise, structural remedies should be revisited in ways that recognise the
greater effectiveness of line of business divestitures, rather than targeted assets. Finally, when
the government is unable to fashion an effective remedy that will deter anticompetitive post-
merger conduct, the only effective remedy is to move to block the merger. Of course, the agen-
cies need resources that will enable them to resist pressures to settle and go to court, if neces-
sary, to protect competition and consumers.
44 See, e.g., Letter from American Antitrust Institute, Food & Water Watch, and National Farmers Union to
the U.S. Department of Justice Re: Proposed Merger of Monsanto and Bayer (26 July 2017),
http://antitrustinstitute.org/sites/default/files/White%20Paper_Monsanto%20Bayer_7.26.17_0.pdf.
See also Letter from American Antitrust Institute, Food & Water Watch, and National Farmers Union
to the U.S. Department of Justice Re: Monsanto-Bayer Merger: Competitive Concerns Surrounding
Traits-Seeds-Chemicals Platforms, Digital Farming, and Farm Data (3 October 2017),
www.antitrustinstitute.org/sites/default/files/AAI-FWW-NFU_MON-BAY%20addendum.pdf.
45 See Competitive Impact Statement at 17 and 18, US v. Bayer AG, Monsanto Company and BASF SE, Case
1:18-cv-01241 (D.C. Cir. May 29, 2018), www.justice.gov/opa/press-release/file/1066651/download.
46

PART II
TYPES OF
REMEDIES

05
Structural Remedies
Charles F (Rick) Rule, Andrew J Forman and Daniel J Howley1
Overview
The US Supreme Court states that restoring competition is the ‘key to the whole question of an
antitrust remedy.’2 This goal is echoed by the antitrust agencies, which, in considering merger
remedies, generally seek to preserve or restore competition that they believe may be lost by the
transaction. The Department of Justice’s (DOJ) 2004 Policy Guide to Merger Remedies (2004 DOJ
Remedies Guide) states that ‘[a]lthough the remedy should always be sufficient to redress the
antitrust violation, the purpose of a remedy is not to enhance premerger competition but to
restore it.’3 Likewise, the Federal Trade Commission’s (FTC) 2017 report on merger remedies states
‘[t]he goal of any remedy is to preserve fully the existing competition in the relevant markets at
issue.’4 The European Commission (EC) generally has similar goals for its merger remedies.5
1 Rick Rule and Andrew J Forman are partners, and Daniel J Howley is counsel, at Paul, Weiss, Rifkind,
Wharton & Garrison LLP. The authors thank W Michael Holden, a paralegal at the firm, for his assistance.
2 United States v. E. I. du Pont de Nemours & Co., 366 U.S. 316, 326 (1961).
3 Dep’t of Justice, Antitrust Div. Antitrust Division Policy Guide to Merger Remedies, 4 (October 2004)
www.justice.gov/atr/page/file/1175136/download (2004 DOJ Remedies Guide). Assistant Attorney General
Makan Delrahim withdrew the 2011 DOJ Remedies Guide. The 2004 DOJ Remedies Guide remains in
effect pending an updated policy: www.justice.gov/opa/speech/assistant-attorney-general-makan-
delrahim-delivers-remarks-2018-global-antitrust. The 2011 DOJ Remedies Guide similarly states that
a successful merger remedy must effectively preserve competition in the relevant market. US Dep’t of
Justice, Antitrust Div. Antitrust Division Policy Guide to Merger Remedies, 1 (June 2011),
www.justice.gov/sites/default/files/atr/legacy/2011/06/17/272350.pdf (2011 DOJ Remedies Guide).
4 Federal Trade Commission, The FTC’s Merger Remedies 2006–2012, 15 (January 2017) (the FTC’s Merger
Remedies); see also Federal Trade Commission, Frequently Asked Questions About Merger Consent
Order Provisions (FTC FAQ), www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/
mergers/merger-faq#Overview.
5 Commission Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under
Commission Regulation (EC) No 802/2004 (2008), http://ec.europa.eu/competition/mergers/legislation/
files_remedies/remedies_notice_en.pdf
49

Structural Remedies
These goals are generally accomplished through structural remedies or conduct remedies,
or both. This chapter focuses on structural remedies. Structural remedies are often used to
address competitive problems that the enforcers identify in horizontal mergers (i.e., mergers
involving companies with competing products at the same level of the distribution chain). As
the FTC states, where a remedy is required, ‘most orders relating to a horizontal merger will
require a divestiture.’6 The DOJ notes that ‘structural remedies generally will involve the sale of
physical assets by merging firms’ and in some instances can also require ‘that the merged firm
create new competitors through the sale or licensing of intellectual property . . . rights.’7
As discussed in more detail below, agencies generally look to ensure, among other things
that the divested assets are sufficient to preserve competition; that the buyer has the business
and financial capability to compete successfully; and that the actual mechanics of the divesti-
ture are likely to enable success.
In terms of the assets to be divested in structural remedies, the requirements are
fact-specific. Although each transaction is unique, the ‘Division favors the divestiture of an
existing business entity that has already demonstrated its ability to compete in the relevant
market.’8 However, depending on the facts and circumstances, the agencies may accept a dives-
titure of less than an existing, intact business or may demand more than an existing, intact
business. In situations where less than an existing business is being divested, the agencies may
consider other protections, such as an upfront buyer or ‘crown jewel’ provisions, both of which
are discussed in more detail below.
The agencies will also consider the potential buyer or buyers to ensure that the divested
assets are likely to be used to preserve competition. As discussed below, the analysis of the
buyer is influenced by a variety factors, including the nature of the assets in the divestiture
package and the timing of the remedy. For example, there can be different considerations and
procedural requirements in the context of a divestiture to an ‘upfront buyer’ than in the context
of a divestiture without an initially identified buyer.
Finally, there are various requirements that the agencies can use to help ensure that the
mechanics of the divestiture are likely to enable success, including appropriately tailored tran-
sition services agreements.
Assets to be divested
Tangible and intangible assets
The antitrust agencies recognise that ‘there are certain intangible assets that likely should
be conveyed whenever tangible assets are divested.’9 While the specific assets that must be
divested and the type of disposition varies from deal to deal, depending on the products, indus-
tries and buyers at issue, generally divestiture buyers must receive all tangible and intangible
assets needed to replicate competition that may be lost due to the merger. As the DOJ states,
6 FTC FAQ.
7 2004 DOJ Remedies Guide, at 7. See also 2011 DOJ Remedies Guide, at 6 .
8 2004 DOJ Remedies Guide, at 12. See also 2011 DOJ Remedies Guide, at 9.
9 2004 DOJ Remedies Guide, at 10. See also 2011 DOJ Remedies Guide, at 7 (‘to ensure an effective
structural remedy, any divestiture must include all the assets, physical and intangible, necessary for the
purchaser to compete effectively with the merged entity.’).
50

Structural Remedies
‘the divestiture assets must be substantial enough to enable the purchaser to maintain the pre-
merger level of competition, and should be sufficiently comprehensive that the purchaser will
use them in the relevant market and will be unlikely to liquidate or redeploy them.’10
For tangible asset divestitures, the mechanism for accomplishing the divestiture is usually
a sale of the assets to the divestiture buyer. If a sale is not practical, the agencies may permit
merging parties to divest via other arrangements, such as leases or licences. For example, in 2017,
the DOJ permitted CenturyLink and Level 3 Communications to merge, but required that they
divest certain fibre-optic cable through long-term leases that were ‘typical industry practice.’11
For intangible assets, such as intellectual property or rights, divestitures are usually accom-
plished through either the sale of the assets or licensing. For instance, in the remedy resolv-
ing the DOJ’s challenge to the 2013 merger between US Airways and American Airlines, DOJ
required, among other things, the parties to divest certain slots—which are rights to take off or
land—at slot-controlled airports. The DOJ believed the slot divestitures, along with the other
required remedies, would help ensure that low-cost carriers would have the ability and incen-
tive to compete successfully against the merged entity.12
Merging parties will occasionally require use of the intangible assets that are subject to
divestiture. For example, where intellectual property is required to be divested, if the merging
parties also require access to that intellectual property, the agencies will consider permitting a
non-exclusive licence of the intellectual property back to the merging parties from the dives-
titure buyer. For example, the DOJ agreed to such a licensing arrangement in the settlement
permitting the closure of the Monsanto/Delta Pine Land transaction in 2007.13 There, the merg-
ing parties were required to divest the rights to certain cotton seed varieties, but were allowed
to license back those rights for use in research. Similarly, agencies may permit non-exclusive
licences to be provided from the merging parties to the divestiture buyers.
Ultimately, the exact extent of the assets to be divested will often depend on the buyer
and specific facts and circumstances. For example, if the buyer has or is likely to have certain
assets already, the agencies may not require duplicative assets to be included in the divesti-
ture package.
10 2004 DOJ Remedies Guide, at 9–10. See also 2011 DOJ Remedies Guide, at 8 (‘[t]he divestiture assets
must be substantial enough to enable the purchaser to effectively preserve competition, and should be
sufficiently comprehensive that the purchaser will use them in the relevant market and be unlikely to
liquidate or redeploy them.’).
11 Competitive Impact Statement, United States v. CenturyLink Inc., 1:17-cv -02028, at 13 (D.D.C. Nov. 14,
2017), available at www.justice.gov/atr/case-document/file/1011721/download.
12 Dep’t of Justice, Justice Department Requires US Airways and American Airlines to Divest
Facilities at Seven Key Airports to Enhance System-wide Competition and Settle Merger Challenge
(12 November 2013), www.justice.gov/opa/pr/justice-department-requires-us-airways-and-american-
airlines-divest-facilities-seven-key.
13 See, e.g., Competitive Impact Statement, United States v. Monsanto Co., 11:07-cv-00992 (D.D.C.
31 May 2007), www.justice.gov/atr/case-document/competitive-impact-statement-154.
51

Structural Remedies
Existing business entities

Generally speaking, the antitrust agencies have expressed a preference for the divestiture
of an existing business.14 Enforcers ‘favor[] the divestiture of an existing business entity that
has already demonstrated its ability to compete in the relevant market.’15 This is because ‘[a]n
existing business entity provides current and potential customers with a track record they can
evaluate to assure themselves that the unit will continue to be a reliable provider of the relevant
products.’16 As the FTC further explains:
‘The divestiture of an entire business (that is, an on-going, stand-alone, autono-

mous business, and which may include assets relating to operations in other mar-
kets) of either the acquired or acquiring firm relating to the markets in which
there is a concern about anticompetitive effects, is most likely to maintain or
restore competition in the relevant market, and thus will usually be an acceptable
divestiture package.’17
The ideal divestiture package in the agencies’ eyes is often an ‘on-going, stand-alone, autonomous
business’ or division that includes all assets, personnel and contractual relationships necessary
to compete and that does not meaningfully rely on other parts of the merging parties’ business.18
The agencies have also accepted divestiture of retail stores, factories, etc., where the divestiture
includes all the assets needed to compete. For example, in 2014, DOJ required the divestiture of
two paper mills in clearing Verso Paper Corp’s acquisition of NewPage Holdings Inc.19
14 See, e.g., 2008 EC Remedies Guide, at 10 (‘The Commission has a clear preference for an existing
stand-alone business. This may take the form of a pre-existing company or group of companies, or of a
business division which was not previously legally incorporated as such’); Federal Trade Commission,
Frequently Asked Questions About Merger Consent Order Provisions, https://www.ftc.gov/tips-advice/
competition-guidance/guide-antitrust-laws/mergers/merger-faq#The Assets To Be Divested (‘The
divestiture of an intact, on-going business generally assures that the buyer of such a package will
be able to operate and compete in the relevant market immediately, thereby remedying the likely
anticompetitive effects of the proposed acquisition and minimizing the Commission’s risk that it will
be unable to obtain effective relief’).
15 2004 DOJ Remedies Guide, at 12. See also 2011 DOJ Remedies Guide, at 8 (Enforcers ‘often will insist on
the divestiture of an existing business entity that already has demonstrated its ability to compete in the
relevant market.’).
16 2004 DOJ Remedies Guide, at 12. See also 2011 DOJ Remedies Guide, at 9 (‘an existing business entity
typically possesses not only all the physical assets, but also the personnel, customer lists, information
systems, intangible assets, and management infrastructure necessary for the efficient production and
distribution of the relevant product, and it has already succeeded in competing in the market.’).
17 FTC FAQs.
18 Federal Trade Commission, Frequently Asked Questions About Merger Consent Order Provisions,
https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/mergers/merger-faq#The
Assets To Be Divested.
19 Dep’t of Justice, Justice Department Requires Divestitures in Verso Paper Corp.’s Acquisition of
NewPage Holdings, Inc. (31 December 2014), www.justice.gov/opa/pr/justice-department-requires-
divestitures-berso-paper-corps-acquisition-newpage-holdings-inc.
52

Structural Remedies
The antitrust agencies also will consider accepting divestiture of less than an existing busi-
ness where it is ‘possible to assemble an acceptable set of assets from both of the merging firms
to create a viable divestiture.’20 In order to do so, the agencies ‘must be persuaded that these
assets will create a viable entity that will restore competition.’21 There are several examples of
these types of divestitures, including numerous in the pharmaceutical sector.
Scope relative to relevant market

The antitrust agencies focus on whether the divestiture package will provide the divestiture
buyer with the ability and incentive to compete at such a level as to replace the competition
that is being lost as a result of the transaction. Accordingly, the antitrust agencies may require
a divestiture package that goes beyond the specific relevant markets in which there are com-
petitive concerns if additional assets are required to preserve competition effectively in those
relevant markets.
Although often FTC and DOJ directives are confined to the US and to the relevant market
at issue, in certain circumstances, the antitrust agencies may seek divestiture of a worldwide
business or non-overlapping products to address a competitive problem related to overlapping
products within a particular region. For example, in Guinness/Grand Met, Dkt. No. C-3801, the
FTC ‘required divestiture of foreign assets even though the relevant geographic market was lim-
ited to the United States.’22 Similarly, as part of the remedy in the Bayer AG/Monsanto transac-
tion, the DOJ required ‘the divestiture of additional complementary assets that are needed to
ensure that [the divestiture buyer] has the same innovation incentives, capabilities and scale
that Bayer would have as an independent competitor including, most notably, Bayer’s nascent
“digital agriculture” business.’23
‘Crown jewel’ provisions

In certain circumstances, the antitrust agencies may require ‘crown jewel’ provisions, which
require a more marketable divestiture package be provided to a divestiture trustee to sell if the
merging parties are not able to sell the originally agreed package of assets within the agreed
period of time. If the remedy includes a ‘buyer upfront,’ the agencies may not focus as much on
crown jewel provisions.
As the FTC explains, these provisions may be required ‘where there is a risk that, if the
respondent fails to divest the original divestiture package on time . . . or if the original divesti-
ture falls through for some reason, a divestiture trustee may need an expanded or alternative
20 2004 DOJ Remedies Guide, at 13. See also 2011 DOJ Remedies Guide, at 9 (Agencies will ‘consider
accepting divestiture of less than an existing business when a set of acceptable assets can be assembled
from both of the merging firms.’).
21 2004 DOJ Remedies Guide, at 13. See also 2011 DOJ Remedies Guide, at 9 (Agencies ‘must be persuaded
that these assets will create a viable entity that will restore competition.’).
22 FTC FAQs.
23 Dep’t of Justice, Justice Department Secures Largest Negotiated Merger Divesture Ever to Preserve
Competition Threatened by Bayer’s Acquisition of Monsanto (29 May 2018), www.justice.gov/opa/pr/
justice-department-secures-largest-merger-divestiture-ever-preserve-competition-threatened.
53

Structural Remedies
package of assets to accomplish the divestiture remedy.’24 This situation can arise where a new
buyer may need a different or larger package of assets in order to be competitive or because
it will be easier and quicker for the divestiture trustee to sell a more marketable package. For
example, the FTC included crown jewel provisions in the 2003 remedy that resolved Quest
Diagnostic’s transaction with Unilab. The original remedy required divestiture of specific
Northern California assets to the third party, LabCorp. But in the event that divestiture was not
consummated ‘the provisions require divestiture of a more extensive package of assets consist-
ing of either Quest’s outpatient Laboratory Services business or its entire Laboratory Services
business in Northern California because a prospective buyer other than LabCorp may require
additional assets to fully restore competition in the relevant market.’25
The DOJ has taken different positions over time on crown jewel provisions. The DOJ
2004 Remedies Guide states that ‘crown jewel provisions are strongly disfavored.’26 However, the
now-withdrawn 2011 DOJ Remedies Guide acknowledges that crown jewel provisions are ‘neces-
sary’ in certain cases ‘to ensure that the remedy will effectively preserve competition.’27 The EC
Remedies Guide similarly recognises the need for such provisions in similar circumstances.28
The buyer of the divestiture package

Buyers of divestiture packages are subject to review and approval by the antitrust agencies. The
antitrust agencies consider each buyer to ensure they are ‘ready, willing, and able to operate
the assets in a manner that maintains or restores competition in the relevant market.’29 The
agencies do so to guard against the risk that the buyer will fail to compete successfully with the
divested assets.
The antitrust agencies will generally discuss a proposed divestiture package with the pro-
spective buyer and will often request documents from the buyer, including their business plans
for the assets to be divested. The FTC has stated that it evaluates potential buyers in numerous
ways, including:
• considering whether the buyer has the financial resources to consummate the proposed
divestiture and to remain a vigorous competitor in the market;
• assessing the proposed buyer’s commitment to remain in the market by analysing its past
operations and business plans as well as its future business plans for the divested assets;
• assessing the proposed buyer’s experience and expertise to operate effectively in the market;
24 Federal Trade Commission, Frequently Asked Questions About Merger Consent Order Provisions,
https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/mergers/
merger-faq#CrownJewels
25 In the Matter of Quest Diagnostics Incorporated, et al., 135 FTC 350, 2003 WL 25797219 (F.T.C. 3 April, 2003).
26 2004 DOJ Remedies Guide, at 36.
27 2011 DOJ Remedies Guide, at 1.
28 2008 EC Remedies Guide, at 45 (‘In such circumstances . . . the parties will have to propose a second
alternative divestiture . . . Such an alternative commitment normally has to be a ‘crown jewel’, i.e. it
should be as least as good as the first proposed divestiture in terms of creating a viable competitor once
implemented, it should not involve any uncertainties as to its implementation and it should be capable
of being implemented quickly in order to avoid that the overall implementation period exceeds what
would normally be regarded as acceptable in the conditions of the market in question.’)
29 FTC FAQ.
54

Structural Remedies
• considering the proposed buyer’s historical financial documents and its future business
plans for the proposed divestiture;
• talking with industry members familiar with the proposed buyer such as competitors, sup-
pliers and customers;
• talking with lenders and other creditors of the proposed buyer, particularly those involved
in the possible financing of the proposed deal; and
• assessing the proposed buyer’s current position in the relevant market30 by carefully ques-
tioning prospective buyers about their requirements, operating plans and business plans
regarding the assets that are sought to be acquired.31
The other antitrust agencies conduct similar evaluations. For example, the DOJ rejected the
parties’ proposed divestiture of certain Medicare Advantage health plans in the failed Aetna/
Humana transaction. The district court agreed with the DOJ that the proposed buyer ‘is not
likely to have the internal capacity – including IT, ability to manage star ratings, and neces-
sary personnel and management – to successfully operate the divestiture plans so as to replace
the competition lost by the merger.’32 In reaching its conclusion, the court relied in part on the
‘extremely low purchase price’ for the divestiture package and on internal emails at the pro-
posed divestiture buyer that raised doubts about the buyer’s belief in its ability to successfully
operate the divested plans.33
The agencies have found buyers acceptable in a wide variety of situations, including where
a buyer ‘has a track record of operating similar assets successfully,’ a buyer that has ‘brought
together a management team experienced in the relevant market,’ ‘firms operating in differ-
ent geographic markets but within the same product market,’ and ‘smaller firms . . . operating
within the same geographic and product markets.’34 Ultimately, whether a particular buyer
will be approved is a fact-specific question, and depends on the specific nature of the indus-
try, the assets in the divestiture package and the identity, experience, wherewithal, and plans
of the buyer.
Occasionally, the antitrust agencies will require that an entire package of assets be divested
to a single acquirer only. The agencies may do this where they believe operations of ‘a certain
scale and/or scope may be necessary for the buyer of the assets to operate them efficiently or to
have the incentive or means to operate them for anything but a short term.’35 For example, the
agencies may believe that a divestiture buyer must have a ‘footprint’ in a broad geography so as
to have adequate brand recognition, scale efficiencies, etc. to compete effectively.
Generally speaking, where the antitrust agencies approve a buyer (or buyers), they either
do so before or at the same time as the remedy that resolves the underlying competition con-
cerns related to the transaction (this is referred to as an ‘upfront buyer’ in the United States
and a ‘fix-it-first’ process in the EC); or they do not identify a specific buyer at or before the time
the remedy is entered and retain the right to approve the buyer at a later stage. In the United
30 Id.
31 Id.
32 United States v. Aetna, 240 F.Supp.3d 1 (D.D.C. 23 January 2017).
33 Id.
34 FTC FAQ.
35 FTC FAQ.
55

Structural Remedies
States, the antitrust agencies agree to remedies under both processes; however, both agencies
are ‘increasingly requiring an identified buyer (upfront buyer).’36 The EC more often may agree
to remedies without an identified buyer.
Depending on the circumstances and asset package, the antitrust agencies can believe that
upfront buyers help to minimise the risk with the divestiture and speed up the divestiture sale.
For example, the FTC has often required upfront buyers in supermarket transactions because
the FTC tends to believe supermarkets are ‘particularly vulnerable to having their assets dete-
riorate during the search for a post order buyer.’37
Agencies also can, on occasion, impose penalties on parties that do not complete divesti-
tures in sufficient time. For example, in the consent decree in General Electric/Baker Hughes,
the DOJ included a requirement that for each day after certain defined dates, defendants
‘pay to the United States $1,500 per day until all the Divested Assets’ in certain jurisdictions
were divested.38
Finally, it is possible, although rare, to divest a business via ‘spin off’ such that there is no
third-party buyer. This only tends to happen where the divested businesses are deemed inde-
pendently viable.
Ongoing entanglements and transition services

Agencies and courts ‘are skeptical of a divestiture that relies on a “continuing relationship
between the seller and buyer of divested assets” because that can leave the buyer suscepti-
ble to the seller’s actions – which are not aligned with ensuring that the buyer is an effective
competitor.’39 Indeed, some orders have required divestitures to be ‘absolute,’ meaning the
merging companies ‘have no continuing ties to the divested business or assets, no continuing
relationship with the buyer, and no financial stake in the buyer’s success.’40
The antitrust agencies are often concerned that continuing entanglements between the
divestiture buyer and the combined firm would undermine the establishment of the divestiture
buyer as a competitor with incentives to compete vigorously. Moreover, the continued interac-
tion between these competitors raises the risk of improper coordination. For example, the DOJ’s
Remedies Guide cautions that ‘close and persistent ties between two or more competitors . . .
can serve to enhance the flow of information or align incentives that may facilitate collusion or
cause the loss of a competitive advantage.’41
36 Patricia Brink, et al., A Visitor’s Guide to Navigating US/EU Merger Remedies, 12 Competition Law
international (2016), www.justice.gov/atr/file/883616/download.
37 FTC FAQ citing Ahold/Bruno’s, Dkt. No. C-4027; Albertson’s, Inc./American, Dkt. No. C-3986; Shaw’s/Star,
Dkt. No. C-3934 (divestiture in one market was post-order requirement); Kroger/Fred Meyer, Dkt. No.
C-3917; Kroger/Groub, Dkt. No. C-3905; Ahold, Dkt. No. C-3861; CVS/Revco, Dkt. No. C-3762.
38 United States v. General Electric, et al., Final Judgment, 1:17-cv-1146 (D.D.C.), www.justice.gov/atr/
case-document/file/1056411/download.
39 United States v. Aetna, at 91.
40 FTC FAQ.
41 2004 DOJ Remedies Guide, at 18 n. 26. See also 2011 DOJ Remedies Guide, at 19.
56

Structural Remedies
The FTC explains that:
[D]ivestiture proposals in which the buyer intends to rely on the respondent

to finance the divestiture, or where the proposal includes performance pay-
ments by the buyer have been rejected. Financial arrangements that rely on
performance-based payments are always troubling to the extent they may skew
either parties’ incentives to compete vigorously.42
Nonetheless, the antitrust agencies recognise that some degree of continuing relationship
may be required post-divestiture to help ensure the competitive viability of the divestee. For
example, short-term transition services agreements can be required as part of the divestiture
package whereby the merged company provides supply contracts, IT support, human resources
assistance, maintenance and repair commitments, etc. In fact, DOJ consent decrees often
require that transition services be provided at the divestiture buyer’s option and provide that
those transition services agreements can be extended subject to DOJ’s discretion.43
The exact nature of any transition services agreement depends on the specific needs of the
divestiture buyer in regards to competing with the divestiture package. For instance, the DOJ
Remedies Guide notes that a short-term supply agreement may be appropriate ‘if the purchaser
is unable to manufacture the product for a limited transitional period (perhaps as plants are
reconfigured or product mixes are altered) . . .’44
The duration of such agreements is often closely examined by the antitrust agencies. The
agencies may be concerned that agreements that are too short will not provide the divestiture
buyer with enough time to become viable, but that agreements that are too long could reduce
the divestiture buyer’s incentive to compete against the merged parties.45
Conclusion
The general goal of the antitrust agencies in evaluating remedies is to restore the competition
that may be lost in the underlying transaction. This general goal can be achieved in ways that
are tailored to the specific facts of each transaction. For structural remedies, as described above,
agencies evaluate many factors, including the sufficiency of divested assets, the adequacy of the
divestiture buyer and the actual mechanics of the divestiture.
42 FTC FAQ.
43 See, e.g., Modified Final Judgment, United States v. Parker-Hannifin Corp., 1:17-cv -01354-JEJ , at 10 (D.
Del. Apr. 30, 2018 ), available at www.justice.gov/atr/case-document/file/1059391/download.
44 2004 DOJ Remedies Guide, at 18. See also 2011 DOJ Remedies Guide, at 18 (‘the Division might require a
supply agreement to accompany a divestiture if the purchaser is unable to manufacture the product for
a transitional period (perhaps as plants are reconfigured or product mixes are altered.’).
45 2004 DOJ Remedies Guide, at 18–10. See also 2011 DOJ Remedies Guide, at 18 n. 41.
57

06
Non-Structural Remedies
Carrie C Mahan and Natalie M Hayes1
There are two basic forms of merger remedies: structural remedies (e.g., divestitures) and
non-structural remedies (e.g., conduct or behavioural remedies). Non-structural remedies
are often used in conjunction with divestitures,2 but the US federal antitrust agencies have a
long-held bias against purely non-structural remedies, other than in very limited circum-
stances. As the DOJ has stated, ‘the speed, certainty, cost and efficacy of a remedy are important
measures of its potential effectiveness.’3 Thus, ‘structural remedies are preferred to conduct
remedies in merger cases because they are relatively clean and certain, and generally avoid
costly government entanglement in the market.’4
The DOJ’s most recent published policy guide on merger remedies, issued in 2011, appeared
to step back somewhat from this clear preference for structural remedies, by noting that differ-
ent types of mergers (horizontal, vertical, or mergers with both vertical and horizontal aspects)
present ‘different competitive issues and, as a result, different remedial challenges’.5 However,
the DOJ withdrew these guidelines in late 2018 and reinstated the DOJ 2004 Remedy Guide, sug-
gesting the agency has swung back to a preference for structural remedies.6
1 Carrie C Mahan is a partner and Natalie M Hayes is an associate at Weil, Gotshal & Manges LLP.
2 See Bureaus of Competition & Econ, Fed Trade Comm’n, Report on The FTC’s Merger Remedies
2006–2012, 18–19 (2017), www.ftc.gov/system/files/documents/reports/ftcs-merger-remedies-2006-2012-
report-bureaus-competition-economics/p143100_ftc_merger_remedies_2006-2012.pdf (the 2017 FTC
Merger Study).
3 US Dep’t of Justice, Antitrust Division Policy Guide to Merger Remedies 7 (2004), available at www.
justice.gov/sites/default/files/atr/legacy/2011/06/16/205108.pdf (the DOJ 2004 Remedy Guide).
4 Id.
5 See US Dep’t of Justice, Antitrust Division Policy Guide to Merger Remedies 6 (2011), www.justice.gov/
atr/public/guidelines/272350.pdf (the DOJ 2011 Policy Guide).
6 Makan Delrahim, Assistant Attorney Gen, US Dep’t of Justice, It Takes Two: Modernizing the Merger
Review Process, Remarks at the 2018 Global Antitrust Enforcement Symposium (25 September 2018),
58
Despite some statements emphasising the potentially pro-competitive aspects of

non-structural remedies, in recent years both antitrust agencies have demonstrated a strong
(and growing) trend of disfavouring the use of conduct remedies to resolve competitive con-
cerns. For instance, in 2018, 10 of the 11 FTC merger enforcement actions that settled involved
divestitures (albeit with some conduct remedy components) to resolve competitive concerns.7
On the other hand, the FTC imposed non-structural remedies alone in only one merger, which
was vertical.8 The current leaders of the DOJ and FTC have publicly stated that the agencies will
approach conduct remedies with heightened scepticism – even in vertical mergers.9
Types of non-structural remedies

A wide array of non-structural remedies can be tailored to address specific competitive con-
cerns, including internal firewalls, external remedies, hybrid remedies, third-party consents
and approvals, and agency monitoring and reporting requirements. These different types of
remedies are often used in combination to address specific industry dynamics.
Firewall provisions
Firewall provisions restrict the dissemination of, and access to, competitively sensitive infor-
mation within a firm, which helps prevent improper information sharing between competitors
and anticompetitive conduct.10 In practice, firewalls ensure that competitively sensitive infor-
mation is shared only with certain personnel of the merged company – generally employees
without decision-making responsibilities for pricing, sales, contracting, marketing, or distrib-
uting the merged firm’s competing products. For example, a firewall could be imposed in a verti-
cal merger where an upstream manufacturer acquires a downstream distributor to ensure the
personnel responsible for manufacturing do not have access to information about rival firms
that use the merged firm’s distribution services. Thus, the firewall minimises the risk that the
integrated firm will use information to disadvantage a rival competitor, resulting in a reduction
in competition. Moreover, the firewall can prevent the merged firm from using newly acquired
information to facilitate coordination.11 Firewall provisions are imposed for a specified duration
to ensure the restricted information is isolated and not utilised for anticompetitive purposes.
Firewalls also require monitoring to ensure compliance.
available at www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-
remarks-2018-global-antitrust; see also www.justice.gov/atr/merger-enforcement.
7 See American Bar Association, Section of Antitrust Law, 2018 Annual Review of Antitrust Law
Developments, Chapter VII Section A(3)(a). Includes enforcement actions in merger matters where the
FTC approved a Final Order during 2018.
8 Id. at 141–142.
9 See, e.g., Makan Delrahim, Assistant Attorney Gen, US Dep’t of Justice, Antitrust and Deregulation,
Keynote Address at American Bar Association’s Antitrust Fall Forum (16 November 2017), available
at www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-keynote-add
ress-american-bar (the Delrahim 2017 Address); D Bruce Hoffman, Acting Director, FTC Bureau
of Competition, Vertical Merger Enforcement at the FTC, Remarks as prepared for Credit Suisse
2018 Washington Perspectives Conference (18 January 2018), available at www.ftc.gov/system/files/
documents/public_statements/1304213/hoffman_vertical_merger_speech_final.pdf.
10 See 2011 DOJ Policy Guide at 13–14; 2012 FTC Remedy Guide at 5.
11 See 2011 DOJ Policy Guide at 13–14; 2017 FTC Merger Study at 16.
59

For example, when the Coca-Cola Company and PepsiCo Inc bought their largest bottlers,
the FTC was concerned that the vertical mergers would provide Coke and Pepsi with competi-
tor information about Dr Pepper Snapple Group, the third-largest competitor in the industry.
The FTC imposed a firewall within each company to prevent bottling employees from sharing
competitively sensitive information with the Coke and Pepsi employees involved in producing
the respective flavours.12
Firewalls may also be used where the merging parties have access to competitively sensi-
tive information regarding assets ordered to be divested. Here, a firewall prevents harm to the
asset purchaser that could occur if the competitively sensitive information were shared.13
External remedies
External remedies regulate how the transacting parties interact with other market participants.
Mandatory licensing provisions

As an alternative to divestiture, the agencies may require the transacting parties to license cer-
tain technology, intellectual property or other assets to third parties.14 Licensing provisions are
generally used when the relevant intellectual property protection covers a broad range of prod-
ucts and the parties may need access to the intellectual property to research or develop other
products. In these circumstances, the mandatory licensing arrangement can ensure that cus-
tomers continue to have access to the products without stifling innovation.
In 2011, for instance, the DOJ permitted a joint venture formed by Comcast and NBC
Universal to proceed on the condition that the parties agreed to license programming to
online competitors (among other conditions).15 In another matter, the FTC imposed a licens-
ing arrangement rather than a divestiture because of the importance of providing consumers
access to a lower-priced alternative to a breakthrough cancer pain drug.16
Fair dealing provisions

Fair dealing provisions are designed to ensure that equal access, efforts and terms are available
to those who contract with the transacting parties. For example, in vertical mergers these pro-
visions may require an upstream company to deal with all downstream competitors on equal
terms, such as on price, quality, service and access. This can protect against the merged firm dis-
advantaging independent downstream firms by charging them higher prices, restricting their
access to key inputs, or providing them lower quality products or services.
12 See The Coca-Cola Company, 75 Fed Reg 61,141 (FTC 4 October 2010); PepsiCo Inc, 75 Fed Reg 10,795 (FTC
26 March 2010).
13 See, e.g., Tesoro Corp, Docket No. C-4405, Decision and Order, (7 August 2013), available at www.ftc.
gov/os/caselist/1310052/index.shtm; Kinder Morgan Inc, Docket No. C-4355, Decision and Order
(14 June 2012), available at www.ftc.gov/os/caselist/1210014/index.shtm.
14 See 2011 DOJ Policy Guide at 15–16; 2012 FTC Remedy Guide at 9.
15 See United States and Plaintiff States v. Comcast Corp et al, Final Judgment (D DC 2011) (No. 1:11-cv-
00106) (filed 1 September 2011), available at www.justice.gov/atr/case-document/file/492196/download;
see also Press Release, US Dep’t of Justice, Justice Department Allows Comcast-NBCU Joint Venture
to Proceed with Conditions (18 January 2011), available at www.justice.gov/opa/pr/justice-departmen
t-allows-comcast-nbcu-joint-venture-proceed-conditions.
16 See Cephalon Inc, 138 FTC 583 (2004).
60

In 2018, for example, the FTC imposed non-discrimination requirements as part of its settle-
ment with Northrop Grumman and Orbital ATK.17 Northrop Grumman was one of four suppliers
of missile systems and Orbital ATK was ‘one of only two viable suppliers of [solid rocket motors]’,
a key input to the production of missile systems. The FTC was concerned that that the merged
firm ‘would have the ability to disadvantage competitors’ to its missile business ‘by denying or
limiting their access to’ solid rocket motors.18 To resolve the FTC’s concerns, the parties agreed
to make solid rocket motors available on a non-discriminatory basis to competing contractors
participating in the same missile system prime contracting process. The non-discrimination
provisions prohibited ‘any potential discriminatory conduct affecting price, schedule, quality,
data, personnel, investment, technology, innovation, design, or risk.’19
Generally, the agencies will also require an arbitration provision to allow complainants to
resolve disputes without agency involvement.20
Prohibitions on restrictive contracting practices

The agencies may, for example, prohibit the merged entity from engaging in restrictive con-
tracting practices that could harm competition in the relevant market. Exclusive dealing
contracts can be pro-competitive, anticompetitive or competitively neutral depending on the
circumstances. If a merger would allow the combined firm to use exclusivity to prevent com-
petitors from succeeding or entering into the marketplace, the agencies will impose restric-
tions.21 According to the DOJ, this ‘may be particularly appropriate in vertical mergers where
the merged firm will control an input that its competitors need to remain viable’.22 The agencies
may temporarily prohibit the merged firm from entering into long-term exclusivity contracts or
short-term contracts that contain automatic-renewal clauses.23 In some situations, the merged
firm may be required to amend or terminate an existing exclusive contract.24
17 Northrop Grumman Corp and Orbital ATK, Inc, 83 Fed Reg 27,776 (FTC 14 June 2018), available at www.ftc.
gov/system/files/documents/federal_register_notices/2018/06/northrop_published_analysis_frn_6-14-
18.pdf.
18 Id. at 2.
19 Id. at 3.
20 See 2011 DOJ Policy Guide at 15.
21 Id. at 17.
22 Id.
23 As an example of this, the 2011 DOJ Policy Guide cites United States v. Comcast Corp, Competitive Impact
Statement 34–37 No. (1:11-cv-00106) (D.D.C. 2011), available at www.justice.gov/atr/cases/f266100/266158.
pdf. The Modified Final Judgement was entered 21 August 2013, available at www.justice.gov/atr/case-
document/file/492176/download.
24 See, e.g., Transitions Optical, Docket No. C-4289, Decision and Order (22 April 2010), available at www.
ftc.gov/os/caselist/0910062/100427transopticaldo.pdf (‘Paragraph II.B: exclusive agreements with
Indirect Customers must: i) be terminable without cause, and without penalty, on 30 days written
notice; ii) be available on a partially exclusive basis, if requested by the customer; and iii) not offer flat
payments of monies in exchange for exclusivity.’); CoStar Group Inc, Docket No. C-4368, Decision and
Order (29 August 2012), www.ftc.gov/sites/default/files/documents/cases/2012/08/120830costardo.pdf
(requiring CoStar to allow customers in long-term contracts to terminate them early).
61

Anti-retaliation provisions
Anti-retaliation provisions come in many forms and are designed to prevent the merged entity
from unreasonably restricting competition. Terms may be imposed to prohibit the merged firm
from retaliating against customers who conduct business (or consider conducting business)
with its competitors.25
For example, in 2016, three cable companies that distribute television programming merged
to create New Charter. The DOJ was concerned that New Charter would have an incentive to
restrict online video distributors’ access to video programmers’ content. Accordingly, the DOJ
imposed anti-retaliation provisions that prohibited New Charter from entering into any agree-
ment forbidding, limiting or creating incentives to retaliate against a video programmer for pro-
viding content to online video distributors.26
Anti-retaliation provisions may also restrict the merged firm from retaliating against a
party that complains or provides information to the relevant antitrust agency about alleged
non-compliance with a consent decree.
Additional types of remedies

Hybrid remedies
Consent decrees will often impose non-structural remedies along with a divestiture require-
ment to ensure the divestiture is successful. These hybrid remedies are often required to allow
the divestiture buyer to successfully integrate the divested assets and begin competing success-
fully in the relevant market. In its retrospective on merger remedies from 2006–2012, the FTC
found that all divestitures of ongoing businesses succeeded.27 The Commission stated that this
finding confirmed its conclusion that ‘divestiture of an ongoing business, which includes all
assets necessary for the buyer to begin operations immediately, maximizes the chances that the
market will maintain the same level of competition post-divestiture.’28
Therefore, agencies will comprehensively assess the extent to which the acquirer may need
short-term assistance or transitional services in order to operate and viably compete in the
affected market.29 They will often impose temporary support agreements such as administra-
tive support or infrastructure services. They can also require the parties to supply a product to
the divestiture buyer for a fixed period of time or until it can produce the product independently.
In addition, the merged firm may be required to temporarily enter into sales and supply agree-
ments with the acquirer, or use best efforts to facilitate the assignment of necessary contracts
25 See 2011 DOJ Policy Guide, supra note 2, at 18.

26 See US v. Charter Communications Inc, Time Warner Cable Inc, Advance/Newhouse Partnership and
Bright House Networks LLC, (No. 1:16-cv-00759 ) (D DC filed 25 April 2016), available at www.justice.gov/
atr/file/891506/download.
27 2017 FTC Merger Study at 16.
28 Id.
29 See 2011 DOJ Policy Guide at 18–19.
62

to the acquirer.30 The consent decree may also prohibit the merged firm from using a brand that
gives it an advantage in the marketplace for a limited time as the competing firm establishes its
own reputation.31
Experienced employees are often paramount to the successful operation of divested assets.
Therefore, agencies may require the transacting parties to incentivise critical employees to
remain with the assets until divested or to accept employment from the acquirer.32 Accordingly,
the merged firm may then be prohibited from rehiring these employees for a specific period of
time.33 The parties may also be required to assist the buyer with hiring qualified employees.
Fair dealing provisions and non-discrimination provisions will often be included in these
ancillary remedies, and the agencies commonly reserve the right to appoint an interim monitor
to supervise the transition and ensure the parties provide adequate assistance to the acquirer.
Third-party consent and approval

Whether merger remedies contain structural remedies, non-structural remedies or both,
the specific requirements of the agency-imposed order often involve third parties who must
consent to or approve the transfer of certain assets. If such consents or approvals are neces-
sary, then the transacting parties may be required to obtain all such third-party consents and
approvals before the agencies will accept the proposed remedy.34
Transparency provisions
Transparency provisions require a merged firm to provide a regulatory agency with information
it otherwise would not be legally required to provide. The purpose is to alert the agency to a par-
ty’s noncompliance with certain remedy requirements.35 For example, while a particular agency
30 Id. See also 2012 FTC Merger Guide note 6 at 16 (‘The parties may be required to persuade customers
to switch to the buyer and then remain with the buyer for some transitional period while the buyer
establishes its own reputation.’).
31 See e.g., Nevada v. UnitedHealth Group Inc, 2008 US Dist LEXIS 109093, at *18 (D Nev 8 October 2008)
(requiring the merged firm to divest its individual Medicare Advantage line of business in the Las Vegas
area and prohibited the divesting party from using the AARP brand in that area). This may become
an increased area of focus because the FTC recently reported that ‘[s]everal buyers in the case study
underestimated the strength of brand loyalty and the difficulty customers encountered in switching
suppliers. In one case, the buyer did not receive the rights to either brand name from the merging
parties and could not attract customers, even after lowering its price.’
32 See 2011 DOJ Policy Guide at 19; 2012 FTC Remedy Guide at 15, 17 (‘[T]he parties may be required to
encourage those key employees to transfer to the buyer, for example by providing financial and other
incentives to those key employees to accept the buyer’s employment offer.’); see also US v. United
Technologies Corp and Goodrich Corp, Final Judgment (D DC 2013) (No. 1:12-CV-01230-KBJ ) (filed
29 May 2013), available at www.justice.gov/atr/case-document/file/514186/download (requiring the
merged firm to provide information relating to important personnel and prohibiting it from interfering
with employment offers or enforcing non-compete clauses).
33 Id. See also United States v. AlliedSignal Inc, 2000–2 Trade Cas para. 73,023 (D DC 2000); United States v.
Aetna Inc, 1999–2 Trade Cas paras. 72,730 (ND Tex 1999).
34 See 2012 FTC Remedy Guide at 14.
35 As an example of this, the 2011 DOJ Policy Guide cites United States v. MCI Commc’ns Corp, 1994-2 Trade
Cas paras. 70,730 (D DC 1994) (requiring disclosure of various data, including prices, terms and
conditions of telecommunications services, volume of traffic, and average time between order and
delivery of products between certain entities).
63

does not have the authority to regulate prices, it may still require the merged firm to report its
pricing information. Price lists with differential pricing for certain customers could reveal a
violation of discrimination provisions in a consent order. The agencies frequently require par-
ties to a consent decree to submit periodic compliance reports describing their efforts to comply
with the remedy requirements.
Prior notification and approval provisions

The FTC and DOJ may also require prior notice and prior approval provisions in consent
decrees.36 Prior notification provisions typically require the merged firm to notify the appropri-
ate antitrust agency prior to future transactions in the relevant markets. Prior approval clauses,
in contrast, typically require the merged entity to obtain approval before closing future transac-
tions for a designated period of time.
The agencies have varied their positions with respect to when such provisions should be
imposed. In 1995, the FTC adopted a policy that settlement agreements would no longer have
prior approval and notice clauses as a routine matter.37 The FTC’s current standard for including
these provisions is whether there is ‘a credible risk that a company that engaged or attempted to
engage in an anticompetitive merger would, but for an order, engage in an otherwise unreport-
able anticompetitive merger.’38
For years, the DOJ’s practice similarly only used these clauses for a relatively narrow and
predictable category of transactions. However, a survey of more recent prior notice provisions
has evidenced that the DOJ has been imposing these clauses with far greater frequency ‘seem-
ingly indiscriminately’.39
36 See 2011 DOJ Policy Guide at 17; see also Fed Trade Comm’n, Statement Concerning Prior Approval and
Prior Notice Provisions, 60 Fed Reg 39,745 (3 August 1995); available at www.ftc.gov/sites/default/files/
documents/federal_register_notices/notice-and-request-comment-regarding-statement-policy-
concerning-prior-approval-and-prior-notice/950803noticeandrequest.pdf (the 1995 FTC Statement).
37 See Id.
38 Fed Trade Comm’n, frequently asked questions about merger consent order provisions Q 44-45,
www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/mergers/merger-faq.
39 Wm Randolph Smith and Megan Louise Wolf, Prior Notice: How a Merger Remedy Can Be
Anticompetitive, Bloomberg Law Insights (8 March 2013), available at http://antitrust.bna.com/
atrc/7033/split_display.adp?fedfid=29966136&vname=atrcnotallissues&wsn=499977000&searchid=312
60640&doctypeid=1&type=oascore4news&mode=doc&split=0&scm=7033&pg=0.
64

Conduct remedy considerations

Advantages
Conduct remedies can be helpful remedial tools because they afford the flexibility to precisely
design each remedy to the specific harm presented.40 Furthermore, they can mitigate the risk
of anticompetitive harm without sacrificing valuable efficiencies that would be lost through
a divestiture.41
In addition to being an appropriate form of relief for vertical mergers, conduct remedies
may be effective in circumstances where:
• The competitive harm will likely be temporary. For example, rapidly changing technologi-
cal developments or other external factors may limit how long the remedies are necessary.
• The characteristics of the industry limit the viability of a divestiture. For example, there may
be superseding public interest concerns, an absence of suitable buyers, or limited options to
support or create an effective competitor.
• When the FTC investigated General Electric’s (GE) proposed acquisition of Avio, it deter-
mined that the merger would substantially lessen competition in the sale of engines for
a specific aircraft. GE and rival Pratt & Whitney (P&W) were the only two firms that manu-
factured the aircraft ’s engine, and Avio designed a critical component for it. P&W had
no viable alternatives for designing this component, and the FTC believed the merger
would give GE the ability and incentive to disrupt Avio’s product development for P&W.
The Department of Defense, however, identified potential non-economic benefits of the
transaction and determined that a divestiture was impossible because of highly unusual
national security circumstances. Instead, the FTC used conduct remedies to prohibit GE’s
interference with Avio’s work for P&W and with Avio’s staffing decisions for that project.42
• The characteristics of the transaction preclude a straightforward divestiture.43
40 See Deborah L Feinstein, Director, Bureau of Competition, Federal Trade Commission, The
Significance of Consent Orders in the Federal Trade Commission’s Competition Enforcement Efforts
(27 September 2013), www.ftc.gov/speeches/dfeinstein/130917gcrspeech.pdf. (‘[C]onsent orders are not
boilerplate, one-size-fits-all documents . . . each transaction or proscribed conduct is different, the harm
being addressed is different, and consequently the specific order provisions needed to address that
harm will be different. The Commission uses the flexibility it has to craft each remedy to the specific
situation before it in a given matter.’)
41 See 2011 DOJ Policy Guide at 6–7; see, e.g., United States v. Thomson Corp, 2008 US Dist LEXIS 58819 (D DC
17 June 2008) (requiring licensing of intellectual property related to divested assets); Ciba-Geigy Ltd,
62 Fed. Reg. 409 (FTC 3 January 1997) (licensing of competitors ordered rather than divestiture).
42 General Electric Company, Docket No. C-4411, Decision and Order 6–10 (27 August 2013), available at
www.ftc.gov/sites/default/files/documents/cases/2013/08/130830generalelectricdo.pdf.
43 2017 FTC Merger Study at 18 (‘It can be particularly difficult to restore the pre-merger state of
competition if the merging parties have commingled, sold, or closed assets; integrated or dismissed
employees; transferred customers to the merged entity; or shared confidential information.’); See, e.g.,
Graco Inc, Docket No.C-4399, Decision and Order (18 April 2013), available at www.ftc.gov/sites/default/
files/documents/cases/2013/04/130418gracodo.pdf (consummated merger where the transacting
parties’ assets were already integrated and/or discontinued); Keystone Orthopaedic Specialists LLC,
Docket No. C-4562, Decision and Order (14 December 2015), available at www.ftc.gov/system/files/
documents/cases/151218keystonedo.pdf (merger of orthopaedic practice groups, several had already left
the group to form their own practice).
65

• In its consent order against Evanston Northwestern Healthcare, the Commission artic-
ulated that because of the length of time that had elapsed between the closing of the
merger and the conclusion of the litigation, divestiture was not an appropriate remedy
even though structural remedies are the preferred relief in Section 7 cases.44
• In 2012, Renown Health, the largest provider of acute care hospital services in north-
ern Nevada, acquired two local cardiology groups. The FTC charged that this reduced
competition for the provision of adult cardiology services in the relevant area. However,
because the ‘assets’ controlled by Renown were doctor-employees, the FTC determined
that divestiture was not appropriate. It instead required Renown Health to temporar-
ily suspend the non-compete provisions with its cardiologists. This allowed the phy-
sicians to seek other employment, including positions with other hospitals in the rel-
evant area.45
Criticisms
While non-structural relief can help agencies preserve the procompetitive benefits of a trans-
action while protecting against the risk of potential competitive harm, conduct remedies are
still vulnerable to criticism. In contrast to structural remedies, which are generally ‘simple,
relatively easy to administer, and sure’ to preserve competition,46 behavioural remedies raise
various concerns,47 including the following:
• They are difficult to draft and clearly define. The agencies acknowledge that when design-
ing conduct remedies, ‘displacing the competitive decision-making process widely in an
industry, or even for a firm, is undesirable.’48 Accordingly, ‘effective conduct remedies are
tailored as precisely as possible to the competitive harms associated with the merger to
avoid unnecessary entanglements with the competitive process.’49 This can be easier said
than done; however, because ‘the behavior that such remedies seek to prohibit or require
is often difficult to fully specify.’50 It may also be challenging to determine the appropriate
duration of a conduct remedy given the difficulty in assessing how long it will take new
entry or expansion to occur.
• The outcomes are uncertain. It is no easy task to design a conduct remedy that will appro-
priately replicate the competitive dynamics of a particular market. Even when well-crafted,
conduct remedies ultimately set static rules that do not fully account for changes in the
44 Evanston Northwestern Healthcare Corp, 2007 FTC LEXIS 210, 248, 251, motion granted, 2007 FTC LEXIS
209 (FTC 2007), judgment entered 2008 FTC LEXIS 47, later proceeding, 2008 FTC LEXIS 62 (FTC 2008).
45 Renown Health, Docket No. C-4366, Decision and Order (30 November 2012), available at www.ftc.gov/
sites/default/files/documents/cases/2012/12/121204renownhealthdo.pdf.
47 American Bar Association, Section of Antitrust Law, Presidential Transition Report: The State of
Antitrust Enforcement 22 (January 2017), available at www.americanbar.org/content/dam/aba/
publications/antitrust_law/state_of_antitrust_enforcement.authcheckdam.pdf (calling behavioural
remedies ‘controversial’).
48 See 2011 DOJ Policy Guide at n.12.
49 Id.
50 John E Kwoka and Diana L Moss, Behavioral Merger Remedies: Evaluation and Implications for
Antitrust Enforcement 6, American Antitrust Institute, available at www.antitrustinstitute.org/sites/
default/files/AAI_wp_behavioral%20remedies_final.pdf.
66

market. Thus, conduct remedies may eventually distort the market because they may
restrict the merged firm from engaging in conduct that would be pro-competitive as the
market changes.51
• They may incentivise circumvention. In addition to potentially being overly intrusive or
burdensome, conduct remedies ‘attempt[ ] to require a merged firm to operate in a manner
inconsistent with its own profit-maximizing incentives’.52 Imposing such restrictions does
not eliminate the firm’s incentive to pursue profit. Instead, such restrictions may introduce
incentives for non-compliance, and conduct remedies are easier to circumvent than struc-
tural remedies.53
• They are expensive and difficult to monitor or enforce. Conduct remedies ‘tend to entangle
the Division and the courts in the operation of a market on an ongoing basis’.54 They require
continued monitoring and are challenging to enforce, particularly requirements such as
non-discrimination clauses and information firewalls.55 Unfortunately, the agencies may
not always have the tools or resources to do so effectively. Therefore, a prominent criticism
of conduct relief is that it imposes direct and potentially substantial costs upon the govern-
ment and the public.56
Agency preferences and perspectives

Both the DOJ and FTC have consistently asserted that structural relief in the form of a divesti-
ture is the most appropriate way to prevent the competitive harm threatened by an unlawful
horizontal merger.57 However, the agencies’ view on whether conduct remedies effectively pre-
serve competition has evolved over time.
For example, the guidance provided by the DOJ’s 2004 Merger Remedy Policy Guide strongly
characterised conduct remedies as relief of a last resort. The DOJ expressly instructed that ‘con-
duct relief is appropriate only in limited circumstances’ and specifically discussed the prob-
lems with such remedies.58
51 See US Dep’t Of Justice, Antitrust Division Policy Guide to Merger Remedies 8 (2004), www.justice.gov/
sites/default/files/atr/legacy/2011/06/16/205108.pdf (the DOJ Policy Guide) (‘For instance, a requirement
that the merged firm not discriminate against its rivals in the provision of a necessary input can raise
difficult questions of whether cost-based differences justify differential treatment and thus are not
truly discriminatory.’).
52 Kwoka at 5.
54 See Id. at 17.
55 Delrahim 2017 Address.
57 See In re ProMedica Health Sys Inc, 2012 FTC LEXIS 58, at 161–62 (FTC 2012), concurring opinion at
2012 FTC LEXIS 60 (FTC 2012); 2012 FTC Remedy Guide, supra note 6, at 4 (‘Anticompetitive horizontal
mergers are most often remedied by a divestiture’); see also 2011 DOJ Policy Guide, supra note 2, at 2 (‘In
horizontal merger matters, structural remedies often effectively preserve competition, including when
used in conjunction with certain conduct provisions.’).
67

In 2009–2010, the DOJ began to show a new willingness to use conduct remedies in merger
enforcement.59 Its revised Merger Policy Guide (updated in 2011) reflected a more flexible
approach to merger remedies, making clear that the agency no longer had an absolute prefer-
ence for structural relief over conduct remedies. The 2011 DOJ Policy Guide also provided an
expanded list of conduct remedies and a greater sensitivity to the circumstances in which the
agency may employ them.60
The FTC similarly evidenced this shift toward wider endorsement of conduct remedies to
preserve the competition lost from certain otherwise anticompetitive mergers. In 2012, the FTC
published its Statement on Negotiating Merger Remedies, which stated that conduct provisions
may be effective relief for vertical mergers and as ancillary relief with divestitures.61
In late 2018, the DOJ withdrew the 2011 guidelines and reinstated the 2004 guidelines,
suggesting a shift back to treating conduct remedies primarily as a last resort.62 However, the
DOJ’s approach remains unclear, as a top DOJ official in 2019 indicated ‘the DOJ would consider
behavioural remedies when there is a vertical merger that’s promoting economic efficiencies
and those efficiencies can’t be achieved without a merger or a structural remedy.’63
Moreover, various scholars and practitioners have been critical64 of the conduct relief
required to resolve vertical issues in certain notable cases during this time: Google/ITA,65
Comcast/NCBU 66 and LiveNation/TicketMaster.67 In these cases, the DOJ imposed a broader
swath of conditions on the merged firms, including strict requirements about firewalls, man-
datory licensing and contracting (on specified terms), modifications or nullifications of exist-
ing contracts, and prohibited terms in future contracts. These cases tend to generate debate on
whether restrictive contracting is procompetitive versus anticompetitive, and thus, whether
these restrictions harm competition by hamstringing certain businesses.
59 See Sharis A Pozen, Acting Assistant Att’y General, US Dept. of Justice, Remarks at the Brookings
Institution, Washington, DC (23 April 2012), available at www.justice.gov/atr/public/press_releases/
2012/282517.htm (‘[T]he past several years have shown a marked increase in complex vertical mergers
and mergers with transnational impact, many of which have been in dynamic and innovative
industries. We understood that we needed to employ remedies more flexibly to meet these new
challenges.’); see also Jeremy J Calsyn and Patrick R Bock, Merger Control Remedies: A More Flexible
Administration, Antitrust, Vol 24, No. 3 (Summer 2010) at 15–19.
60 See generally 2011 DOJ Policy Guide at 12–19.
61 See 2012 FTC Remedy Guide at 5.
62 Makan Delrahim, Assistant Attorney Gen, US Dep’t of Justice, It Takes Two: Modernizing the Merger
Review Process, Remarks at the 2018 Global Antitrust Enforcement Symposium (25 September 2018),
available at www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-
delivers-remarks-2018-global-antitrust.
63 Barry Nigro, Deputy Assistant Attorney Gen, US Dep’t of Justice, Question & Answer Session, 2019 Global
Antitrust Enforcement Symposium (10 September 2019).
64 See Kwoka; Delrahim 2017 Address.
65 US v. Google Inc and ITA Software Inc, No. 1:11-cv-00688, Final Judgment (D DC, filed 5 October 2011),
available at www.justice.gov/atr/cases/f275800/275897.pdf.
66 US v. Comcast.
67 US v. Ticketmaster Entertainment Inc and Live Nation Inc, No. 1:10-cv-00139, Final Judgment (filed
29 June 2010), available at www.justice.gov/atr/case-document/file/513331/download; see also Press
Release, US Dep’t of Justice, Justice Department Requires Ticketmaster Entertainment Inc to Make
Significant Changes to Its Merger with Live Nation Inc (25 January 2010), available at www.justice.gov/
atr/public/press_releases/2010/254540.pdf.
68

The debate has recently resurged in light of remarks made by DOJ Assistant Attorney
General Makan Delrahim and FTC Bureau of Competition Director Bruce Hoffman.68 Both
expressed strong disfavour of conduct remedies because of the increasing difficulty of draft-
ing and enforcing them.69 Further, each emphasised that the role of the DOJ and FTC is that of
antitrust enforcer, not regulator.70 Their concerns regarding conduct remedies except in very
narrow circumstances may indicate the agencies’ greater scepticism about using conduct rem-
edies broadly in the future.
68 Delrahim 2017 Address; D Bruce Hoffman, Acting Director, FTC Bureau of Competition, Vertical
Merger Enforcement at the FTC, Remarks as prepared for Credit Suisse 2018 Washington
Perspectives Conference (18 January 2018), available at www.ftc.gov/system/files/documents/public_
statements/1304213/hoffman_vertical_merger_speech_final.pdf.
69 Id.
70 Id.
69

07
Antitrust Remedies in Highly Regulated Industries
Christine A Varney, Julie A North, Margaret Segall D’Amico and

Molly M Jamison1
Introduction
In the United States, the Department of Justice (DOJ) and the Federal Trade Commission (FTC)
(together, ‘the antitrust authorities’) are responsible for reviewing mergers and acquisitions,
imposing appropriate remedies and ensuring a competitive market. From a regulatory perspec-
tive, firms in most industries must only wait for either the DOJ’s or FTC’s clearance to move
forward with their transactions. However, firms in most highly regulated industries may face
an additional barrier to closing their transactions. Subject not only to review by the DOJ or FTC,
transactions in the banking, telecommunications, energy, agriculture, transportation and med-
ical industries, among others, may also require transaction approval from the relevant regula-
tory agency that has jurisdiction over that industry.
Those regulatory agencies, as experts in the respective industries over which they have
jurisdiction, may have their own views on how to fashion an effective remedy to counter any
alleged harms from a transaction that could differ from the antitrust authorities’ approach.
Where the antitrust authorities and regulatory agencies may disagree, the merging entities often
face the consequences of prolonged review periods and repeated negotiations. However, regu-
latory review in conjunction with antitrust review can also have many benefits. The antitrust
authorities can take advantage of the regulatory agencies’ strengths, including ready access to
industry-specific information, expertise on the industry dynamics, insight into the market and
its participants, and the ability to effectively monitor and oversee compliance. These strengths,
if used effectively, can lead to more tailored remedies than the DOJ or FTC alone might be able
to implement. Striking the right balance of deferring to regulatory expertise and adhering to the
antitrust authorities’ mandate to maintain competition is key to ensuring both efficient and
appropriate review and remedies.
1 Christine A Varney, Julie A North and Margaret Segall D’Amico are partners, and Molly M Jamison is an
associate, at Cravath, Swaine & Moore LLP.
70
This chapter contains three sections. ‘Overview of merger remedies’ identifies common
types of merger remedies across all industries; ‘Highly regulated industries’ discusses the dif-
ferent approaches taken between the antitrust authorities and regulatory agencies in three
highly regulated industries: telecommunications, banking and energy; and ‘Balancing rem-
edies with regulation’ discusses questions raised by having both agency and antitrust review,
and offers three considerations that may facilitate more efficient and effective remedies in
those circumstances.
Overview of merger remedies

As described by the FTC and DOJ, the goal of remedies in merger review is to effectively preserve
efficiencies while maintaining competition in the relevant market.2 The antitrust authorities
have long recognised that determining an appropriate merger remedy – perhaps especially
where the transaction involves a highly regulated industry – requires a close analysis of the
facts of each individual transaction. Because every merger remedy must be tailored to the cir-
cumstances, ‘[c]arefully tailoring the remedy to the theory of the violation is the best way to
ensure that the relief obtained cures the competitive harm’.3 Nonetheless, the antitrust authori-
ties adhere to several key principles requiring that merger remedies (1) must restore competi-
tion, (2) should focus on preserving competition rather than protecting individual competitors,
(3) must be based on a careful application of legal and economic principles to the particular
facts of a specific case and (4) must be enforceable.4
The range of potential remedies typically falls within one of two categories: structural
remedies that require divestitures of assets or business divisions; or non-structural conduct
remedies that impose behavioural restrictions or requirements on merging firms.5 The DOJ
and FTC generally require structural remedies, described by the DOJ as ‘simple [and] relatively
easy to administer’,6 to remedy competitive concerns in horizontal mergers. By contrast, where
vertical mergers raise competitive concerns, the DOJ and FTC historically have more often
relied on conduct remedies, but have imposed structural remedies where conduct remedies are
deemed inadequate. This administration has reversed trends set by previous administrations
by increasingly seeking structural remedies, including divestitures, to resolve vertical merger
2 DOJ, Antitrust Division Policy Guide to Merger Remedies 4 (October 2004) (Merger Remedy Guidelines)
(describing the goal of preserving the efficiencies created by the merger ‘without compromising the
benefits that result from maintaining competitive markets’). See also Richard Feinstein, FTC Bureau of
Competition, Negotiating Merger Remedies 4 (January 2012) (describing the FTC’s view that acceptable
remedies ‘maintain or restore competition in the markets affected by the merger’). In September 2018,
the DOJ revoked the 2011 Merger Guidelines and stated that the 2004 Merger Remedy Guidelines will
be in effect until the DOJ releases an updated policy. See Makan Delrahim, Assistant Attorney General,
DOJ, It Takes Two: Modernizing the Merger Review Process 12 (25 September 2018) available at
https://www.justice.gov/opa/speech/file/1096326/download.
3 Merger Remedy Guidelines, supra note 2, at 3.
4 Id. at 3–5.
5 Id. at 7.
6 Id. at 7-8 note 10 (quoting United States v. EI du Pont de Nemours & Co, 366 US 316, 331 (1961)).
71

concerns.7 For example, in connection with AT&T’s acquisition of Time Warner, the govern-
ment first sought to impose structural divestitures before eventually seeking, unsuccessfully,
to block the deal.8
Structural remedies, including divestitures of assets, business divisions and intellectual
property, are common where a merger presents competitive concerns. An analysis by the FTC
of merger remedies over a decade found that 80 per cent of challenged mergers resulted in
structural remedies, with 87 per cent of challenged horizontal mergers resulting in a structural
remedy.9 When imposing structural remedies, the DOJ and FTC strongly prefer divestitures
of an ‘existing business entity that has already demonstrated its ability to compete in the rel-
evant market’.10 Additionally, the antitrust authorities increasingly have required an ‘upfront’
(as opposed to post-close) buyer. The FTC’s remedy study found that 69 per cent of the transac-
tions included in the study required an upfront buyer,11 compared with 33 per cent for which
a post-close remedy was allowed. And, while the agencies have stated a strong preference for
business divestitures as opposed to discrete asset divestitures, at least historically, only 40 per
cent of structural remedies involved ongoing business divestitures, compared with 67 per cent
involving selected assets.12
The antitrust authorities have a wide range of conduct remedies at their disposal, however
these are imposed less frequently than structural remedies. According to the DOJ, conduct rem-
edies are viewed as an option where ‘conduct relief is needed to facilitate transition to or sup-
port a competitive structural solution’ or where a structural remedy would ‘sacrifice significant
efficiencies’ or is ‘infeasible’.13 The most common conduct remedies include firewalls, fair deal-
ing provisions, transparency requirements, non-compete clauses, long-term supply contracts
and the prohibition of certain contracting practices.14 Of course, the antitrust authorities are
not limited to specific types of conduct remedies and may tailor consent decrees to the facts of
the transaction to maximise the likelihood of an effective remedy. Conduct remedies, such as
transparency provisions that may require a merging entity to share information with regula-
tory authorities on an ongoing basis, may be particularly relevant to addressing competitive
concerns in transactions involving highly regulated industries. And as the Remedy Guidelines
note, conduct remedies are more likely to be imposed in ‘industries where there already is close
government oversight’.15
7 Makan Delrahim, Assistant Attorney General, DOJ, Remarks at The Deal’s Third Annual Corporate
Governance Conference (7 June 2018) (commenting that ‘[t]his skepticism of behavioral remedies
for vertical mergers [is] not a new development’), available at https://www.justice.gov/opa/speech/
assistant-attorney-general-makan-delrahim-delivers-remarks-deal-s-third-annual-corporate.
8 See United States v. AT&T Inc., No. 1:17-cv-02511, Compl. (DDC 20 November 2017), available at www.
justice.gov/opa/press-release/file/1012896/download.
9 FTC, The FTC’s Merger Remedies 2006–2012, at 13 (January 2017) (FTC Remedy Review), available at
www.ftc.gov/system/files/documents/reports/ftcs-merger-remedies-2006-2012-report-bureaus-
competition-economics/p143100_ftc_merger_remedies_2006-2012.pdf.
11 The antitrust authorities may require that the parties propose a divestiture to a particular buyer before
accepting the proposed remedy, otherwise known as requiring an upfront buyer.
12 FTC Remedy Review, supra note 9, at 14.
14 Id. at 22–26 (describing the various conduct remedies).
15 Id. at 20.
72

The antitrust authorities have also combined both structural and conduct remedies to pro-
vide a more complete remedy.16 This was particularly true under the Obama administration,
which indicated a more open approach to conduct remedies.17 The 2011 merger remedies guide-
lines ‘signaled . . . a greater willingness to seek behavioral remedies in merger cases’.18
The current administration has reversed course on the agencies’ willingness to seek
behavioural remedies. The Assistant Attorney General for the DOJ’s Antitrust Division, Makan
Delrahim, has criticised conduct remedies as ‘fundamentally regulatory, imposing government
oversight on what should preferably be a free market’.19 More recently, he has confirmed that ‘[t]
he Division has a strong preference for structural remedies over behavioral ones’ identifying
three ‘problems’ with the remedy: they are ‘inherently regulatory’, the Antitrust Division is not
equipped to act as an ‘ongoing regulator’ and behaviour decrees are ‘merely temporary fixes for
an ongoing problem.’20 These preferences were formalised by the DOJ in September 2018 when
the agency withdrew the 2011 Guide to Merger Remedies, reverting to the 2004 Guide – with its
explicit preference for structural relief – until the DOJ releases an updated policy.21 The Director
of the FTC’s Bureau of Competition, Bruce Hoffman, has echoed these concerns, commenting
that, for problematic vertical mergers, the FTC ‘prefer[s] structural remedies [because] they
eliminate both the incentive and the ability to engage in harmful conduct, which eliminates the
need for ongoing intervention’.22
Highly regulated industries

The DOJ and FTC have primary jurisdiction over enforcing the antitrust laws, including merger
review under Section 7 of the Clayton Act, 15 USC Section 18.23 However, transactions in cer-
tain highly regulated industries – such as banking, agriculture, energy, telecommunications
and others – may require additional approvals from the relevant regulator for that industry.
Multiple agencies including the Federal Communications Commission (FCC), the Federal
Energy Regulatory Commission (FERC), federal banking regulators such as the governors of the
16 See id. at 7.
17 See DOJ, Press Release No. 11-788, Antitrust Division Issues Updated Merger Remedies Guide (17 June 2011),
available at www.justice.gov/opa/pr/antitrust-division-issues-updated-merger-remedies-guide.
18 James J O’Connell, Seven Years On: Antitrust Enforcement During the Obama Administration,
30 Antitrust 5, 10 (Spring 2016).
19 Makan Delrahim, Assistant Attorney General, DOJ, Keynote Address at American Bar Association’s
Antitrust Fall Forum (16 November 2017), available at www.justice.gov/opa/speech/
assistant-attorney-general-makan-delrahim-delivers-keynote-address-american-bar.
20 Makan Delrahim, Assistant Attorney General, DOJ, Remarks at the Federal Telecommunications
Institute’s Conference in Mexico City (7 November 2018), available at https://www.justice.gov/opa/
speech/assistant-attorney-general-makan-delrahim-delivers-remarks-federal-institute.
21 Makan Delrahim, Assistant Attorney General, DOJ, Remarks as Prepared for the 2018 Global Antitrust
Enforcement Symposium (25 September 2018), available at https://www.justice.gov/opa/speech/
file/1096326/download.
22 D Bruce Hoffman, Director, FTC Bureau of Competition, Remarks at the Credit Suisse 2018 Washington
Perspectives Conference (10 January 2018), available at https://www.ftc.gov/system/files/documents/
public_statements/1304213/hoffman_vertical_merger_speech_final.pdf..
23 The Hart–Scott–Rodino Act established the pre-merger notification programme that governs the
process by which the FTC and DOJ evaluate proposed mergers. See 15 USC Section 18a.
73

Federal Reserve, the Department of Agriculture (USDA) and the Department of Transportation
(DOT) are often called upon to weigh in on a merger or acquisition, and potentially a proposed
remedy, within their relevant industries.
The DOJ and FTC historically recognised the significance of merger review in these highly
regulated industries. For example, the Merger Remedies Guidelines suggest that where merg-
ers involve other regulatory agencies, monitoring and enforcing remedies may be easier where
regulatory oversight already exists.24 The DOJ and FTC have also recognised that in highly regu-
lated industries, the industry regulator may be a partner in fashioning a remedy. For example,
the DOJ may decide not to include certain provisions in a consent decree if in its view such
issues would be better handled by regulatory remedies and may be able to make monitoring
more efficient by relying on the regulatory agency to ensure compliance.25
The extent to which the antitrust authorities defer to or collaborate with other regulatory
agencies generally varies by industry. In some regulated industries, the DOJ and FTC have
exclusive jurisdiction over certain merger reviews. For example, while FERC maintains juris-
diction over merger review of certain energy sectors, it has no authority over transactions
involving securities acquisitions by natural gas companies or by oil and petroleum companies,
which have historically been reviewed by the FTC.26 On the other end of the spectrum, in cer-
tain regulated industries the DOJ and FTC have no authority or the relevant regulatory agency
has exclusive jurisdiction over mergers. In the energy sector, mergers involving the licensing
of nuclear power plants are immune from antitrust scrutiny.27 In the sports world, there are
several well-known exemptions from the antitrust laws, including an explicit exemption in the
Sports Broadcasting Act to allow the American Football League and National Football League
to merge into a single league.28 In the agriculture sector, the Capper-Volstead Act ensures that
only the Secretary of Agriculture has the authority to challenge cooperative associations.29 In
the transportation sector, despite ongoing deregulation, the Surface Transportation Board has
exclusive jurisdiction over mergers involving common carriers in railways.30
Between these two extremes, there are many regulated industries in which the antitrust
authorities share merger review responsibilities with a regulatory agency. This dual review
model raises many questions about the appropriate balance between the antitrust authorities’
prerogatives with the regulatory agency’s interests and expertise. Should the DOJ and FTC defer
to regulatory agencies that have the experience and resources to monitor their industries? Or

25 See Christine Varney, Assistant Attorney General, DOJ, Briefing on Comcast/NBCU Joint Venture
(18 January 2011), available at www.justice.gov/atr/public/speeches/266156.htm (‘I really want to
highlight the great cooperation and unprecedented coordination with the FCC. The FCC’s order made it
unnecessary for the division to impose similar requirements on certain issues. This approach resulted
in effective, efficient and consistent remedies.’).
26 See II ABA Section of Antitrust Law, Antitrust Law Developments 1372 (7th ed 2012) (Antitrust Law
Developments); Cal v. Fed Power Comm’n, 369 US 482, 486–87 (1962) (finding that the DOJ, FTC and
private parties have standing to challenge natural gas mergers and acquisitions).
27 See Antitrust Law Developments, supra note 34, at 1,377; Energy Policy Act of 2005 Section 625, Pub L
109–58, 119 Stat 594 (codified at 42 USC Section 2,135).
28 Sports Broadcasting Act, 15 USC Section 1,291.
29 See Antitrust Law Developments, supra note 28, at 1,319.
30 15 USC Section 21.
74

should the regulatory agencies’ interests take a back seat in the interest of a consistent approach
to antitrust enforcement? The following subsections provide an analysis of merger reviews and
remedies in three industries with dual review: telecommunications, banking and energy.
Telecommunications
In the telecommunications industry, the Communications Act dictates that the FCC must con-
duct a review that ‘is separate from (though complementary to) the analysis conducted by’ the
antitrust authorities under Section 7 of the Clayton Act.31 This model of separate but comple-
mentary review arises from different statutory standards: the DOJ and FTC’s analysis under the
Clayton Act focuses on ensuring that transactions do not ‘substantially lessen competition’ in
any relevant market; the FCC is charged with ensuring that any merger or acquisition is in ‘the
public interest’.32 This public interest standard ‘is not limited to purely economic outcomes’ but
also must ‘[encompass] the broad aims of the Communications Act’, which include not just a
preference for preserving competition but also, among other things, ‘ensuring a diversity of
information sources and services to the public, and generally managing spectrum in the pub-
lic interest’.33 If the potential harms are outweighed by the potential benefits, including public
interest benefits such as ensuring diversity, localism and broadcasting, the FCC will approve
the transaction.
Since the passage of the 1996 Telecommunications Act mandating deregulation of the
telephone and wireless industry, there has been significant merger activity in this sector. In
response, the antitrust authorities and the FCC have imposed a wide range of remedies in tel-
ecommunications mergers.34 Generally, the DOJ, which has historically reviewed transactions
in the telecommunications space, more often has required structural remedies such as divesti-
tures. For example, the DOJ required divestitures in 13 markets in response to the 2004 merger of
Cingular Wireless and AT&T;35 divestitures in 16 markets in the 2005 Alltel Corporation/Western
Wireless merger;36 and divestiture in eight markets in the 2009 AT&T/Centennial Communications
merger.37 More recently, the DOJ attempted to impose structural remedies in AT&T’s acquisi-
tion of Time Warner, and when that remedy was rejected by the parties, the DOJ sued to block
31 Jon Sallet, General Counsel, FCC, FCC Transaction Review: Competition and the Public Interest
(12 August 2014), available at www.fcc.gov/news-events/blog/2014/08/12/fcc-transaction-review-
competition-and-public-interest.
32 See Telecommunications Act of 1996 Section 601, Pub L No. 104–104, 110 Stat 143 (‘[N]othing in this Act or
the amendments made by this Act shall be construed to modify, impair, or supersede the applicability
of any of the antitrust laws.’). See also Verizon Commc’ns Inc v. Law Offices of Curtis V Trinko, LLP, 540 US
398, 406 (2004) (noting that ‘Section 601(b)(1) of the 1996 Act is an antitrust-specific saving clause . . .
that . . . bars a finding of implied immunity.’)
33 Sallett, supra note 39.
34 See Antitrust Law Developments, supra note 34, at 1344–47.
35 United States v. Cingular Wireless Corp, No: 1:04-CV-01850 (RBW), 2005 WL 6357269, at *2–3 (DDC
14 March 2005).
36 United States v. AllTel Corp, No. 05-1345 (RCL), Slip Op at 4–5 (DDC 13 October 2005), available at
www.justice.gov/atr/case-document/file/484861/download.
37 United States v. AT&T Inc, No. 1:09-cv-1932 (HHK), 2010 WL 1726890, at *1–2 (DDC 10 February 2010).
75

the merger.38 Not all remedies imposed by the antitrust authorities were strictly structural.
The DOJ imposed a conduct remedy in United States v. Verizon Communications concerning
a series of commercial agreements between Verizon Communications Inc, CellcoPartnership
d/b/a/ Verizon Wireless, Comcast Corporation, Time Warner Cable Inc, Bright House Networks
LLC and Cox Communications relating to bundling packages. The parties agreed to enter into a
consent decree requiring that the involved cable companies modify the parties’ joint agreement
and prohibited Verizon from selling its products in certain geographic areas.39
The FCC, by comparison, has more often required conduct remedies. For example, the FCC
approved the AOL and Time Warner merger subject to several conditions to protect competi-
tion in the broadband industry, including requiring that the merged entity allow non-affiliated
cable broadband service on its system and prohibiting the company from interfering with con-
tent from non-affiliated services.40 Likewise, the FCC approved the GTE Corporation and Bell
Atlantic transaction subject to conduct remedies, including several market opening conditions,
and structural remedies, including an agreed-upon spin-off of a subsidiary, Genuity Inc, to an
independently owned public corporation.41
These patterns of antitrust authorities applying structural remedies and the FCC applying
conduct remedies likely reflect not only the agencies’ respective approaches to merger review
but also their respective mandates and resources. The DOJ and FTC are agencies charged with
enforcing the antitrust laws – not regulating and monitoring industries’ compliance. By con-
trast, the FCC is a regulatory agency with both the capacity and statutory imperative to monitor
and regulate the telecommunications industry. The 2017 Centurylink and Level3 merger dem-
onstrates how the agencies can work together to impose a holistic remedy package with both
structural and conduct elements. After review by both the DOJ and FCC of a merger between
the two largest fibre infrastructure providers, the DOJ imposed structural remedies requiring
divestiture of intercity dark fibre assets and other fibre assets in concentrated geographic areas.
In conjunction with the DOJ’s order, the FCC imposed conduct remedies requiring the merged
entity to agree to not raise rates for five years in certain geographic locations.42
The agencies’ mandates often complement each other in merger review, such as in the
recent review of a proposed merger between Sinclair Broadcast Group, Inc. and Tribune Media
Company, where the DOJ focused on identifying appropriate structural remedies while the FCC
evaluated and found serious concerns with the proposed merger’s effect on the public interest.43
38 See United States v. AT&T Inc., No. 1:17-cv-02511, Compl. (DDC 20 November 2017), available at https://
www.justice.gov/opa/press-release/file/1012896/download. Makan Delrahim has clarified the agencies’
view of vertical mergers, including in the telecommunications industry, commenting that ‘[i]f a
structural remedy isn’t available, . . . we will seek to block an illegal merger.’ Delrahim, supra note 26.
39 United States v. Verizon Commc’ns Inc, No. 1:12-CV-01354 (RMC), Slip Op at 8–15 (DDC 13 August 2013),
available at www.justice.gov/atr/case-document/file/514946/download.
40 Time Warner Inc, 16 FCC Rcd. 6547, 6678–79 (2001).
41 GTE Corp, 15 FCC Rcd 14032, 14232–35 (16 June 2000).
42 Final Judgment at 3–4, 13–16, United States v. CenturyLink Inc, No. 1:17-CV-02028 (KBJ), (DDC
6 March 2018) available at www.justice.gov/atr/case-document/file/1041566/download (requiring
divestitures of dark fibre and other fibre assets); Level3 Commn’cns Inc, No. 16-403, 2017 WL 4942794, at
*8, *20-21 (FCC 30 October 2017) (imposing additional conduct remedies).
43 See Hearing Designation Order, In the Matter of Applications of Tribune Media Co. and Sinclair Broadcast
Group, Inc., FCC 18-100 (19 July 2018), available at https://docs.fcc.gov/public/attachments/
FCC-18-100A1.pdf.
76

Ultimately, the deal was abandoned owing to scrutiny from both agencies. However, the two
agencies may not always view transactions in the same light. Occasionally, one agency may
approve a transaction unconditionally while the other identifies concerns and deems that a
remedy is necessary. In the Comcast and Time Warner acquisition of Adelphia Communications
assets, for example, the FCC imposed conditions months after the FTC had approved the trans-
action without remedies.44 While the FTC may have opted to defer to the FCC’s decision in this
situation, this sort of discrepancy as to outcome can add significant costs to firms in terms of
the cost of negotiating with multiple agencies and delay in closing the transaction.
Banking
In the banking industry, mergers are reviewed by both the DOJ, under the Clayton Act, and the
banking regulators with jurisdiction over the merging banks – either the Federal Reserve or the
Federal Deposit Insurance Corporation – under the Bank Merger Act of 1966.45 Banking regula-
tors have separate concerns distinct from the DOJ’s primary concern of maintaining compe-
tition. These concerns are reflected in the Bank Merger Act, which allows banking regulators
to approve even anticompetitive mergers if the negative effects are ‘clearly outweighed in the
public interest by the probable effect of the transition in meeting the convenience and needs of
the community to be served’.46 Likewise, the Dodd-Frank Act requires banking regulators to per-
form an analysis of the efficiency and competitiveness of financial firms, and assess potential
risks of concentration on stability of the US financial system as a result of mergers. Because of
the different legislative mandates of the DOJ and banking regulators, even if the relevant bank-
ing regulator approves a merger, the DOJ has the authority to intervene to block a bank merger
within a consolidated 30-day window after banking regulators’ approval.47
The Bank Merger Act largely replicates the language of the Clayton Act, prohibiting merg-
ers or acquisitions that ‘would result in a monopoly’ or whose ‘effect . . . may be substantially
to lessen competition’.48 It is not surprising then that both banking regulators and the DOJ
have taken similar approaches to reviewing mergers. Both have adopted the Bank Merger
Screening Guidelines, which outline a method to screen out mergers or acquisitions that do
44 FTC, FTCs Competition Bureau Closes Investigation into Comcast, Time Warner Cable and Adelphia
Communications Transactions (31 January 2006) www.ftc.gov/news-events/press-releases/2006/01/
ftcs-competition-bureau-closes-investigation-comcast-time-warner (announcing close of FTC
investigation in January 2006); Time Warner Cable Inc, 21 FCC Rcd 8203, 8332 (13 July 2006) (imposing
conditions on the transaction in July 2006).
45 See IB Phillip E Areeda and Herbert Hovenkamp, Antitrust Law (4th ed 2013) 40 para. 251 (describing
that the banking authority that maintains jurisdiction over a bank will be charged with enforcement.
For federal banks this is the Comptroller of the Currency and for state chartered banks this is the
Federal Deposit Insurance Corporation or the Board of Governors of the Federal Reserve System.);
12 USC Section 1828(c)(2).
46 See 12 USC Section 1828(c)(5)(B).
47 12 USC Section 1828(c)(7)(A); see also Bd of Governors of the Fed Reserve Bd, How do the Federal
Reserve and the US Department of Justice, Antitrust Division, analyze the competitive effects of
mergers and acquisitions under the Bank Holding Company Act, the Bank Merger Act and the Home
Owners’ Loan Act? FAQs, at 11 (Bank Merger FAQs), available at www.justice.gov/sites/default/files/atr/
legacy/2014/10/09/308893.pdf (‘If the banking agency nonetheless approves the transaction, the Division
generally has 30 days after the agency approval to challenge the proposed transaction in court.’).
48 See 12 USC Section 1828(c)(5).
77

not reach certain market concentration levels, measured by the Herfindahl-Hirschman Index
(HHI) levels,49 allowing the regulators to focus their scrutiny only on mergers that are above
these thresholds.50 Despite starting with the same screening guidelines, the DOJ’s analysis can
diverge from the banking regulators’ when it comes to defining the market. Bank regulators
have long adhered to the market definition laid out in United States v. Philadelphia National
Bank, where the Supreme Court found that the relevant market included a ‘cluster’ of products
including services to both consumers and small businesses.51 By contrast, the DOJ tends to use
a stricter definition that often separates small business services from consumer services and
also does not take trusts into account in calculating HHIs.52 This difference in market definition
has led the DOJ to intervene in mergers where banking regulators have approved a merger or
ordered fewer divestitures than the DOJ believes is necessary.53
Both the banking regulators and DOJ historically agreed that ‘appropriate divestiture’ is
the correct remedy to resolve anticompetitive concerns in the banking industry. Large-scale
divestitures are relatively uncommon in bank mergers – a 1998 study by the Federal Reserve
found that for 4,400 bank mergers there had only been 751 branch divestitures between 1989 and
1998, with the largest divestiture (attributed to the BankAmerica merger with Security Pacific
Corporation) requiring a divestiture of 187 branches.54 In the years since, there have been several
high-profile bank mergers, yet large divestitures remain relatively uncommon. Where divesti-
tures are involved, the DOJ takes a far more active role in the divestiture process compared to
the Federal Reserve Board. The Federal Reserve Board often defers to the DOJ in negotiating the
specifics of divestitures, as the Federal Reserve Board itself is more concerned with maintaining
the structure of the market and ensuring continued access to community banking.55
49 The HHI is calculated by summing the squares of the individual firms’ market shares to provide a
measure of market concentration by market share. See DOJ, Horizontal Merger Guidelines Section 5.3
(19 August 2010), available at www.justice.gov/atr/horizontal-merger-guidelines-08192010#5c.
50 See Bank Merger FAQs, supra note 47, at 8 (‘An application for a transaction that includes a proposed
divestiture that would cause the structural effects of the transaction to meet the delegation criteria for
competition (i.e., a change in the HHI of less than 200 points or a post-merger HHI of less than 1800, and
a post-merger market share below 35 percent) is unlikely to be denied for competitive reasons.’)
51 United States v. Phila Nat’l Bank, 374 US 321, 356–57 (1963).
52 See Anthony W Cyrnak, Bank Merger Policy and the New CRA Data, Federal Reserve Bulletin 703, 703–04
(September 1998), available at www.federalreserve.gov/pubs/bulletin/1998/998lead.pdf.
53 While relying on older data (from 1992), a study found that the DOJ was more likely compared to the
Federal Reserve to require divestitures and to require more divestitures. In at least two cases, the
Federal Reserve proposed either a smaller number of divestitures or no divestitures and the DOJ sued
to intervene. Jim Burke, Divestiture As an Antitrust Remedy in Bank Mergers, at 8–9 (1998), available at
www.federalreserve.gov/pubs/feds/1998/199814/199814pap.pdf.
54 Steven J Pilloff, What’s Happened at Divested Bank offices? An Empirical Analysis of Antitrust
Divestitures in Bank Mergers, FEDS Working Paper No. 2002-60, at 10 Tbl 1 (December 2002) available at
www.federalreserve.gov/pubs/feds/2002/200260/200260pap.pdf.
55 See generally Bank Merger FAQs, supra note 47 (detailing Federal Reserve Board’s approach).
78

Energy
FERC and the antitrust authorities both have jurisdiction to review proposed mergers involv-
ing electric public utilities.56 Sections 201 and 203 of the Federal Power Act place all entities
that meet the definition of a public utility under the jurisdiction of FERC and require that FERC
approve the ‘proposed disposition, consolidation, acquisition, or change in control’ of such
an entity.57 As opposed to the antitrust authorities’ focus on the effect on competition, FERC
is required to take into account three broad factors: the effect of the merger on competition;
the effect on rates; and the effect on regulation.58 Moreover, FERC is also charged with ensuring
that mergers are in the public interest. While FERC is not required to find that a merger has a
clearly positive benefit in order to approve the merger, it must find that the ‘transaction taken as
a whole [is] consistent with the public interest’.59
FERC largely adheres to the antitrust authorities’ approach to merger review. In a 1996 pol-
icy statement, FERC clarified its merger review process in an effort to ensure ‘greater regulatory
certainty and expedition of regulatory action in order to respond quickly to rapidly changing
market conditions’.60 In this statement, FERC endorsed the application of the 1992 Horizontal
Merger Guidelines for its own review.61 However, following the DOJ and FTC’s release of updated
merger guidelines in 2010, FERC decided to maintain its current approach and declined the full
adoption of the 2010 guidelines. Instead, FERC reiterated that its analysis was largely in accord-
ance with the 2010 Guidelines in an effort to ensure that it would continue to take a similar
approach to merger review as the antitrust authorities.62
Recent mergers approved by FERC suggest that antitrust authorities may defer to FERC’s
analysis. In March 2016, FERC preliminarily approved Energy Capital Partners and Dynegy Inc’s
plans to form a joint venture to acquire ENGIE’s power portfolio.63 FERC did require mediation of
at least one market.64 Citing the merger guidelines, FERC explained that the guidelines ‘contem-
plate using remedies to mitigate any harm to competition’ and required the merging entities
to provide a plan for mitigation, which could include divestitures or ‘other mitigation meas-
ures’, within 30 days.65 The FTC granted the parties early termination of the Hart–Scott–Rodino
56 Federal Power Act, 16 USC Section 824b (requiring authorisation from FERC for any public utility to
‘merge or consolidate’).
57 FERC, Mergers and Sections 201 and 203 Transactions, (last accessed 28 February 2018) www.ferc.gov/
industries/electric/gen-info/mergers.asp.
58 Id.
59 Inquiry Concerning the Commission’s Merger Policy Under the Federal Power Act: Policy Statement,
61 Fed Reg 68,595–01, 68,598 (30 December 1996).
60 Id. at 68,596.
61 See id.
62 Order Reaffirming Comm’n Policy and Terminating Proceeding, 138 FERC para. 61,109, 61,459–60
(16 February 2012).
63 Atlas Power Finance LLC, 157 FERC para. 61,237 (22 December 2016) (order conditionally
authorising acquisition).
64 Id.
65 Id. at 24.
79

waiting period after FERC’s approval.66 In September 2016, FERC approved the merger of Fortis
Inc with ITC Investment Holdings Inc without remedy.67 Similarly, no action was brought by the
antitrust authorities.
Despite the consistency between FERC and the antitrust authorities in recent mergers,
the agencies have not always taken consistent approaches. In 2000, FERC required conduct
remedies in the merger between American Electric Power Company and Central and South
West Corporation where the DOJ had cleared the transaction without remedy.68 The opposite
occurred in the merger of Exelon Corporation and Public Service Enterprise Group Inc, which
was approved by FERC yet opposed by the DOJ.69 These may be examples where either the anti-
trust authority or FERC was deferring to the decision of the other agencies, but these examples
could also highlight why some have criticised the dual review model as inviting ‘potential
inconsistencies’ and resulting in ‘cost duplication’.70
Other industries
Telecommunications, banking and energy are far from the only industries where regulatory
agencies have historically held some responsibility to review mergers along with antitrust
authorities. For example, in agriculture, while the Capper-Volstead Act continues to provide
antitrust immunity for agricultural cooperatives meeting certain criteria,71 USDA and the anti-
trust authorities have taken a collaborative approach to mergers and acquisitions in industries
that are subject to antitrust review. In 1999, the agencies formalised this arrangement in a mem-
orandum of understanding, dictating that the agencies would ‘coordinate and confer’ on issues
relating to competitive conditions in the agricultural marketplace.72 Today, the DOJ and FTC
often review mergers in certain agricultural industries with the USDA’s input.
In certain transportation industries, Congress has shifted merger review responsibility
from the DOT to the DOJ as part of the ongoing deregulation of the transportation industry more
generally.73 However, the DOT continues to work with the DOJ where appropriate. For example,
in 2001, after United Airlines and US Airways abandoned an attempted merger in the face of anti-
trust scrutiny, the two entities approached DOT with a code share arrangement. The DOT worked
with the DOJ to impose conduct restrictions on the arrangement including requiring independ-
ent fairs, firewalls on review and code share routes, and non-discrimination provisions.74
66 Fed Trade Comm’n, 20160921: Dynegy Inc; ENGIE SA (1 April 2016), www.ftc.gov/enforcement/
premerger-notification-program/early-termination-notices/20160921.
67 Fortis Inc, 156 FERC para. 61,219 (23 September 2016) (order conditionally authorising acquisition).
68 The New PJM Companies, 104 FERC para. 61274 (12 September 2003) (order announcing comm’n inquiry).
69 Proposed Final Judgment, United States v. Exelon Corp, No. 1:06-cv-01138 (JDB) (DDC 22 June 2006),
available at www.justice.gov/atr/case-document/proposed-final-judgment-113.
70 Garry A Gabison, Dual Enforcement of Electric Utility Mergers and Acquisitions, 17 J Bus & Sec L 11,
34–36 (2017).
71 See Christine A Varney, The Capper-Volstead Act, Agricultural Cooperatives, and Antitrust Immunity,
Antitrust Source (December 2010), www.americanbar.org/content/dam/aba/publishing/antitrust_
source/Dec10_Varney12_21.authcheckdam.pdf.
72 Antitrust Law Developments, supra note 34, at 1,315.
73 See id. at 1,507–09.
74 See Review Under 49 USC 41720 of United/US Airways Agreements, 67 Fed Reg 62,846 (8 October 2002).
80

Balancing remedies with regulation

As discussed above, there is a wide range of approaches for merger review between antitrust
authorities and specialised regulatory agencies. Given the range of different approaches, it is
difficult to make generalisations across either agencies or industries. What is clear is that there
are certain strengths and weaknesses to a dual merger review and remedy approach. On the one
hand, the dual review system has been criticised for its purported inefficiency and added costs
of concurrent reviews by two agencies.75 On the other hand, others have touted the importance
of consistent antitrust review76 and the avoidance of agency capture that a dual review system
can accomplish. So how should antitrust authorities approach mergers in highly regulated
industries? Should Congress do away with dual review and grant exclusive merger review juris-
diction to the DOJ or FTC? Or should the regulatory agencies be responsible for merger review
and remedies in their areas of expertise? A review of past practices suggests that there is not a
single right answer to these questions. However, in the current landscape there are considera-
tions that could mediate some concerns about inefficiency and cost.
First, coordination between the relevant antitrust authority and regulatory agency can
facilitate consistent outcomes and ensure that the appropriate remedies are ordered. The most
common critique of having both antitrust and regulatory review of mergers is inefficiency.
Having two federal agencies both expend time and resources reviewing mergers and impos-
ing remedies is expensive for both taxpayers and the merging entities, and extends the time
required to review transactions. Conflicting decisions – where one agency may approve a trans-
action while the other challenges it – also add to the risk of inefficiency. Better coordination
and cooperation can mediate these concerns to an extent.77 As the American Antitrust Institute
identified, increased cooperation should be a ‘high priority’, particularly in industries transi-
tioning from regulated to a more competitive free market.78
Second, antitrust authorities should continue to use regulatory agencies’ strengths to the
fullest extent possible to construct appropriate remedies. Regulatory agencies have expert
knowledge of the industry and often have access to far more information on the market than
the DOJ or FTC would be able to gather on their own. The DOJ and FTC have to rely on receiv-
ing information from parties, competitors and customers in the market. Such information is
often limited in scope and time period. By contrast, regulatory agencies, such as the FCC and
Federal Reserve, have access to information on the market spanning decades and are better able
to access necessary information that can save antitrust authorities time and cost. Moreover,
regulatory agencies already have the ability to monitor and oversee industry actors. Reliance on
the regulatory agencies’ ability to monitor could resolve the frequent concerns about imposing
75 See, e.g., Gabison, supra note 79, at 34–36.

76 See, e.g., William J Baer, Former Dir, FTC, FTC Perspectives on Competition Policy and Enforcement
Initiatives in Electric Power (4 December 1997), available at www.ftc.gov/public-statements/1997/12/
ftc-perspectives-competition-policy-and-enforcement-initiatives-electric.
77 Stuart M Chemtob, Special Counsel for Int’l Trade, DOJ, The Role of Competition Agencies in Regulated
Sectors (11 May 2007) available at www.justice.gov/atr/speech/role-competition-agencies-regulated-
sectors.
78 Diana L Moss, Am Antitrust Institute, Regulated Industries 3–4 (5 December 2005), available at
https://govinfo.library.unt.edu/amc/commission_hearings/pdf/Moss_Statement.pdf.
81

conduct remedies and the use of long-term consent decrees.79 The ability to impose effective
conduct remedies may reduce the DOJ and FTC’s reliance on the one-time fix of a structural
remedy and open the possibility of more tailored remedies.80
Third, the antitrust authorities should consider the regulatory goals of an industry in
fashioning a remedy in that industry. Regulatory agencies often face different and sometimes
competing legislative mandates compared with the DOJ or FTC mandate of maintaining com-
petition. For example, where the statutory goal is deregulation, such as in telecommunications,
antitrust authorities can play a larger role in fashioning remedies that ensure a competitive
market; where a statutory goal is to ensure the stability of the US banking market, it may be
appropriate to consider or defer to regulatory expertise even if competition concerns could
require more extensive remedies. Similarly, multiple regulatory agencies are charged with
ensuring a merger is in the ‘public interest’, including the FCC and FERC. While adherence to the
Clayton Act will often lead to outcomes that are in the public interest, in the form of lower price
or better quality owing to increased competition, this outcome is not guaranteed – a natural
monopolist may be able to maximise consumer interest in some cases.81 For this reason, some
have argued that the DOJ and FTC should take a back seat with regard to the judgments of other
regulatory agencies.82 Of course, a regulatory agency’s judgment of what is in the public inter-
est may fail to take into account the antitrust concerns of the FTC and DOJ, and may result in
a less competitive market that harms consumers in the future. This is the balance that must
be weighed.
Conclusion
There is no one solution for how to approach merger review and remedies in highly regulated
industries. There are, however, many examples of the different approaches taken by both the
antitrust authorities and regulatory agencies in various industries. Despite the often different
approaches and standards applied in dual review circumstances, merger remedies as a whole
have generally been effective and relatively predictable in such industries. As the DOJ, the FTC
and the multiple other regulatory agencies responsible for reviewing mergers in highly regu-
lated industries continue to refine and rework their approaches, one can hope that merger rem-
edies continue to be tailored and effective – and predictable – in the future.
79 See, e.g., Delrahim, supra note 25 (commenting on the DOJ’s concern with longstanding consent decrees).
80 See Moss, supra note 87, at 5 (explaining that structural remedies are ‘immediate and permanent . . .
[but] not trouble-free’).
81 See Gabison, supra note 79, at 33–34 (explaining that ‘[t]he FERC . . . has more experience with public
utilities and natural monopolies’).
82 Id. (arguing that FERC should be the only antitrust regulator of public utility mergers).
82

PART III
PROCESS AND
IMPLEMENTATION

08
Managing Timing of Multi-Jurisdictional Review
John Harkrider and Michael O’Mara1
Antitrust reviews of international deals are increasingly prolonged, resulting in increased costs
for the combining parties, as long waits between deal signing and closing may introduce the
risk of changes to the parties’ business or financial conditions, increase the difficulty of obtain-
ing financing commitments, and distract management from day-to-day operations. As a result,
the merging parties must understand how long it takes for jurisdictions to review a transaction
so they can factor it into their transaction and financing agreements.
Moreover, in international deals with multi-jurisdictional antitrust review, understanding
the strategic implications of the complicated patchwork of review timelines across multiple
jurisdictions can help close the deal earlier and minimise the effect of potential remedies on
deal value. Depending on the risk and filing profile of a transaction, strategic timing of inter-
national notifications can create important advantages for the parties by harmonising global
review to minimise remedies, collecting key early wins to build momentum, or preserving the
ability to litigate in the United States.
Setting an appropriate outside date

It is important that the parties are on the same page in terms of the expected time and effort
it will take to achieve clearance across the required jurisdictions. In particular, it is important
that the agreement between the parties provides for an appropriate outside date that takes into
account the expected time to clearance given the risk and filing profile of the deal. Getting the
outside date right has serious implications for preserving the value of the deal and ultimately
allowing the deal to close.
Setting an appropriate outside date should start with an empirical basis that takes into
account the average time to clearance in the applicable jurisdictions and for deals with similar
risk profiles. The parties should also take into consideration whether their preferred advocacy
1 John Harkrider is a founding partner and Michael O’Mara is an associate at Axinn.
85

strategy may call for a longer or shorter outside date. A relatively short outside date (especially
paired with a reverse break-up fee or ticking fees) can give the parties more incentive to work
diligently to obtain clearances and close, minimising financing risk and disruption to the busi-
nesses. However, a shorter outside date also can give the reviewing agencies more leverage over
the parties and can result in the time-pressured parties agreeing to more expansive remedies
than they otherwise might have in order to avoid prolonging the investigations, or having to
renegotiate the outside date where the economics of the deal may have changed since signing.
On the other hand, a longer outside date gives the agencies less leverage (and the parties more
time for effective advocacy), but comes along with a greater cost to the parties waiting for the
deal to close. Additional flexibility can be added to an outside date, for example by providing
for automatic extensions for certain antitrust triggers like the start of a Request for Additional
Information (Second Request) or Phase II investigation, or the issuance of a complaint.
For example, if the parties are considering preserving a litigation option in the United States,
it is important for the outside date to include sufficient time to litigate a preliminary injunc-
tion after all other clearances are expected to be obtained, or else the parties will not be able
to litigate (or credibly threaten to litigate) without renegotiating the outside date. Of six Hart–
Scott–Rodino Act (HSR) reportable deals since 2010 that litigated through a preliminary injunc-
tion, the average time from filing the complaint to a decision by the court was approximately
five months. This means that the outside date for deals with a realistic litigation option should
probably be no less than five months longer than expected clearance in other jurisdictions.
Clear expectations on review timing

While all jurisdictions have statutory rules that govern the timing of merger review and clear-
ance, in practice the actual review time periods are much longer. The agencies have a number of
mechanisms to delay resolution. For example, in the United States, even though the HSR allows
the parties to close 30 days after they substantially comply with a Second Request, the Federal
Trade Commission (FTC) and Department of Justice (DOJ) routinely request timing agreements
under which the parties are prevented from substantially complying before a certain date and
then are prevented from closing for between 60 and 75 days.2 In Europe, the clock does not even
start until the Form CO is accepted by the European Commission (EC), which can sometimes
take many months of extensive prenotification engagement with the staff. After the Form CO
is accepted, the standard Phase I and Phase II review periods are frequently stopped while the
parties respond to Requests for Information. In many other jurisdictions, including China and
Brazil, the timeline does not start until the filing is accepted by the regulators.
Transactions with any UK customers, sales, or other relationship must also consider the tim-
ing of potential UK filings, which have become increasingly important as the UK’s Competition
and Markets Authority (CMA) has grown more aggressive in asserting jurisdiction over inter-
national transactions, and the scope of its jurisdiction is poised to expand in the post-Brexit
era over transactions that to date have been consolidated into a one-stop EC review. While the
UK is formally a voluntary filing jurisdiction, the CMA can also open investigations on its own
volition and request filings from the parties, sometimes well into the timing of reviews by other
jurisdictions. Moreover, the CMA’s authority includes the ability to investigate the question of
2 See, e.g., US Dep’t of Justice, Model PTA Letter (25 June 2015), available at www.justice.gov/atr/merger-
review-process-initiative-model-pta-letter.
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its own jurisdiction, sometimes through a time-consuming and burdensome investigation, so

a conclusion on the part of the parties that the CMA does not appear to have jurisdiction is not
necessarily the end of the matter.
Like the EC, the CMA requires a significant prenotification process prior to the running of
its formal timeline, but unlike the EC, the scope of CMA jurisdiction can be difficult to predict.
This is because the CMA’s revenue-based thresholds are supplemented by an alternative test by
which the CMA can review any transaction involving an increment to a 25 per cent or greater
share of supply of any UK product or service (even if such products or services would not be con-
sidered economic markets). Accordingly, where there is a reasonable possibility that the CMA
might exercise jurisdiction over the transaction, a proactive approach can be important in order
to avoid a late-in-the-game entry by the CMA and significant delays. A sound CMA strategy can
also help limit the risk of unexpected substantive results resulting from the CMA’s exacting and
sceptical approach toward merger remedies, particularly in vertical transactions.
In addition to agency-driven complications to statutory timelines, the parties themselves
may also have strategic reasons not to file immediately or otherwise delay running the statu-
tory clocks. For example, in the US the parties may either delay HSR filing or delay substantial
compliance with a Second Request to make sure that the US review is finished at the same time
as review in other jurisdictions.
Thus, it is more useful to look empirically at how long transactions actually take to review
rather than to look simply at the statutory periods.
According to the Dechert Antitrust Merger Investigation Timing Tracker (DAMITT) data-
base, in 2018 it took on average 10.5 months for the US agencies to clear significant mergers (i.e.,
mergers that received a Second Request).
It also shows that in 2018 the average EC review period from deal announcement to the end
of Phase I remedy cases took 8.4 months, while the average review period from announcement
to end of Phase II remedy cases was 12.5 months.3
Unsurprisingly, navigating multi-jurisdictional reviews takes longer than reviews by one
jurisdiction. Although not reported in DAMITT, review of purely US-to-US deals takes on aver-
age considerably less than 11 months. Second Requests handled by Axinn on purely US-to-US
deals took on average nine months, while international deals took 10.6 months to complete.
This suggests that post-Brexit the average time for review of transactions that have a signifi-
cant European component is likely to expand, because the number of these transactions that
will be reviewed solely by the EC will decline, as many will also attract review by the CMA.
This will require extra time to coordinate review of the merits and consideration of any pro-
posed remedies.
3 Bryan Koenig, Law360, US Merger Probes Still Drawn Out, Dechert Study Shows (28 January 2019),
available at www.law360.com/articles/1122690/us-merger-probes-still-drawn-out-dechert-study-
shows.
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Choosing when to file where

Choosing when to file in each jurisdiction is an important decision, with real strategic implica-
tions. Most jurisdictions do not have deadlines for notification, providing only that clearance
must be obtained before closing, which allows for flexibility to strategically time each filing.
Importantly, it is not always advisable to file as quickly as possible in all jurisdictions. To the
contrary, there are multiple considerations for strategically timing certain filings.
First, harmonising the timing of key decision points across jurisdictions can streamline
the overall review process by allowing cooperation among the agencies on common issues
such as global product markets (and global remedies), leading to more consistent outcomes
across jurisdictions.
Second, staggering the timing of certain filings may create a strategic advantage by position-
ing a given jurisdiction to be the first or last to clear. For example, if the parties believe that the
United States will clear the transaction with relatively few obstacles, it may be important for the
US filing to be made first so that HSR clearance becomes a signal for other jurisdictions to do the
same. Alternatively, if the parties want to preserve a litigation option in the United States, it is
critical that the United States be the last suspensory jurisdiction to clear the deal and there may
be an advantage in delaying the US filing.
Aligning timing
Harmonising the timing of multiple jurisdictions’ reviews, particularly where the merger raises
global or regional issues, can be more efficient and lead to more consistent results because it
allows for the agencies to share information and coordinate on their findings. Agencies also
prefer this higher level of inter-agency coordination for largely the same reasons.4 This coor-
dination is only really feasible if time frames are aligned to allow for agencies to make key
decisions at about the same time. Since these jurisdictions often have different statutory time
tables, aligning key decision points may mean that not all jurisdictions file at the same time.
In transactions where divestitures of global businesses are expected, it is critical to align
timing so that there may be a single package of consistent remedies. This is important because
it can allow the parties to maximise value by running concurrent processes to find buyers for all
of the divested assets. In particular, the relatively predictable process that results from working
with multiple agencies all at once can even result in a single buyer for all divested assets, which
helps to avoid a situation where there are no realistic buyers for smaller assets.
A good example where timing was successfully aligned for a global remedy was in Thermo
Fisher Scientific’s US$13.2 billion acquisition of Life Technologies. That transaction, announced
in April 2013, was reviewed by agencies in nine different jurisdictions, including the United
States, the European Union, China, Canada, Japan, South Korea, Russia, Australia and New
Zealand. The parties signed cooperation waivers with multiple jurisdictions, which allowed the
agencies to coordinate their efforts in reviewing the acquisition, and as the FTC pointed out in
4 See ICN Merger Working Group, Practical Guide to International Enforcement Cooperation in Mergers,
p. 6, para. 19 (2015) (‘Merger reviews that are aligned at key decision-making stages may allow for more
efficient investigations, more meaningful discussions between agencies and ultimately more consistent
outcomes.’), available at www.internationalcompetitionnetwork.org/uploads/library/doc1031.pdf.
88

its press release approving the consent decree, ‘led to compatible approaches on a global scale’.5
It also allowed for global convergence on a single remedies package of three different business
lines sold to General Electric for US$1 billion (the EC and FTC approved the divestiture buyer on
the same day).
Picking a lead jurisdiction

While in some cases it is preferable to harmonise merger reviews, in others, there is a strategic
advantage to staggering the filings to lead with a favourable outcome (or delay a less favourable
outcome) in a key jurisdiction. This can send a signal to other jurisdictions both in analysis and
result, and build momentum. For example, if one believed that a jurisdiction was more likely to
clear the transaction without remedies and do so in a manner that made economic sense (i.e.,
was persuasive to other jurisdictions), it may make sense to pick that jurisdiction as the lead
jurisdiction, so that other jurisdictions could follow suit.
Correctly timing the staggered filings first requires an understanding of the average review
times of jurisdictions (in addition to the statutory time frames). To illustrate using the DAMITT
average review times, if one expects the merger to result in Phase I remedies in Europe (seven
months) and a Second Request in the United States (11 months), European clearance is likely to
occur first without staggered filings. If one expects the EC’s review to result in Phase II remedies,
US clearance is likely to occur first without staggering.
But the review times reflected in the averages can be shortened with strategic timing of one
or more jurisdictions. For example, if the parties believe that the United States will ultimately
clear the transaction without remedies and potentially without issuing a Second Request, and
that other jurisdictions would be more likely to clear the deal in response, it may be worth
extending the US agencies’ review for several months to do so. If the parties believed that the
FTC or DOJ could clear the transaction in 60 days, it might make sense to ‘pull and refile’ the
HSR (30-day HSR period plus an additional 30 days after pulling and refiling). If the parties
believed that the FTC or DOJ could take longer than 60 days to clear the transaction, the parties
might want to simply delay filing the HSR.
One such case was Dell Technologies’ US$67 billion acquisition of EMC Corporation, where
the parties engaged in over three months of pre-filing engagement with the FTC in the United
States to prevent the issuing of a Second Request, which would have sent a negative signal to
the other 17 reviewing jurisdictions. The FTC was the first mandatory jurisdiction to clear the
transaction, allowing the initial waiting period to expire on 24 February 2016, and over the next
three weeks, nine more agencies cleared the transaction. Allowing for such a long investigation
in the United States without a Second Request is only possible by delaying the filing or pulling
and refiling the HSR Form.
5 Fed Trade Comm’n, FTC Puts Conditions on Thermo Fisher Scientific Inc’s Proposed Acquisition
of Life Technologies Corporation (31 January 2014), available at www.ftc.gov/news-events/
press-releases/2014/01/ftc-puts-conditions-thermo-fisher-scientific-incs-proposed.
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Preserving a litigation option

In certain situations, it can be advantageous to delay filing or review in a jurisdiction, in par-
ticular in the United States, to preserve the option to litigate. The United States is one of the few
jurisdictions that provides for meaningful and timely judicial review of agency determinations.
Situations where one might want to preserve a US option to litigate include deals where there
are unique, challenging issues in the United States, where US agencies are expected to be the
most aggressive, or when a remedy in a foreign jurisdiction would not affect the US businesses,
since it would not be productive litigating in the United States to avoid certain remedies only to
have the same remedies imposed elsewhere. While these scenarios are relatively limited, global
deals can benefit from having every tool at their disposal.
In the United States, judicial review is effectively under a de novo standard (without defer-
ence to the agency’s findings) and if the parties carefully manage the process, litigation can be
concluded within the timetable of most international deals. This litigation typically happens
when the agency files a motion for a preliminary injunction in federal court along with its com-
plaint (the DOJ in federal court, the FTC in its administrative court). The preliminary injunction
action, which proceeds on an expedited timetable, becomes a proxy for litigation of the deal – it
is often effectively won or abandoned at this stage – and so provides a timely litigation option.
The ability to litigate (and thus credibly threaten to litigate) within the deal time improves the
parties’ negotiating posture with the agencies over remedies and ultimate clearance.
One recent example where this ‘US last’ strategy had a positive outcome was the multi-
jurisdictional review of Ball Corporation’s 2016 acquisition of Rexam PLC, which when first
announced was called ‘daunting’.6 Announced in February 2015, the acquisition cleared with
remedies in Brazil in December 2015 and in the European Union in January 2016, leaving the par-
ties with a viable option to litigate in the United States prior to the outside date in August 2016.
This litigation option gave the parties more leverage in negotiating with the DOJ, resulting
in a more favourable remedies package than might otherwise have been required by the DOJ
for clearance.
Timely judicial review is only possible, however, if no other jurisdictions obstruct the par-
ties’ ability to close because, if the transaction cannot close pending review in other jurisdic-
tions, the US agencies have no incentive (and potentially no ability) to seek an injunction, even
if they file a complaint to block the deal. Without the preliminary injunction action, the deal
litigation follows a normal (and longer) litigation path. This is especially a problem at the FTC,
which has a practice of bringing cases through its administrative courts (known as Part III),
without an accompanying preliminary injunction action in federal court where the parties
could not otherwise close the deal. Part III review is considerably longer than a suit in federal
district court, and is subject to automatic de novo review by the Commission, which can sim-
ply reverse the decision of the administrative law judge if it does not like the result. This situ-
ation usually only occurs when the United States is the last jurisdiction to clear the deal, but
in the case of reviews combining US and UK investigations, it is noteworthy that suspensory
effects under UK law do not kick in until the start of a Phase II review, so that in cases where UK
6 Robert Cole, High Antitrust Hurdle for Merger of Can Makers, NY Times (19 February 2015), available at
www.nytimes.com/2015/02/20/business/dealbook/high-antitrust-hurdle-for-merger-of-can-makers.
html.
90

clearance is not a contractual condition to closing, scenarios are possible where the parties are
legally free to close – and thus the US agencies may feel compelled to seek an injunction – while
a parallel UK investigation has yet to reach Phase II review.
Consider the recent predicament faced by the parties in Tronox/Cristal, the proposed
combination of two leading producers of titanium dioxide. The merger was announced in
February 2017 and was cleared over the next several months by regulators in Saudi Arabia,
Australia, China, New Zealand, Turkey, South Korea, and Colombia, leaving only the FTC and EC
reviewing the deal by December. The FTC filed a Part III complaint on 5 December, at about the
same time as the EC opened a Phase II investigation, leaving no threat that the parties would
close without injunctive relief.7
Despite having permission from the Commission to file for injunctive relief in federal court,
FTC staff instead only filed an administrative complaint, either because there was no incen-
tive to litigate earlier or because it was unlikely to meet the standard for an injunction (which
requires the FTC to show a likelihood of irreparable harm) while the merger was suspended
during the EC’s review.
While a preliminary injunction action may have been expected to be resolved on average
about five months after the complaint – before the deal’s original 21 May outside date – the Part
III review would not have allowed for resolution before then. The trial was scheduled for 18 May,
and was expected to last several weeks, followed by a lengthy time for a decision and automatic
review by the full Commission. According to the parties, the FTC stated that it would wait for the
EC to finish its Phase II review and, if the EC cleared the deal, only then would it have filed a pre-
liminary injunction.8 Since the EC was not expected to finish its Phase II review until early May,
resolution of a follow-on preliminary injunction action was also highly unlikely before 21 May.
This led Tronox’s CEO to call the FTC’s complaint a ‘pocket veto type action’, since the FTC
could effectively run out the clock without engaging the merits of the deal in court.9 And, seeing
the writing on the wall, the parties filed a suit in federal district court for a declaratory judgment
in late January to attempt to force the FTC either to seek a preliminary injunction or, if they
would not, to enjoin them from seeking one if and when the EC closed its investigation.
Faced with a ticking clock and armed only with this novel (and somewhat dubious)
declaratory judgment lawsuit, the parties were forced to renegotiate an extension of the out-
side date. On 1 March 2018, the parties signed an extension that provided for automatic three-
month extensions through 31 March 2019 (subsequently dropping the declaratory judgment
suit). In exchange for this extension Tronox was required to commit to a reverse break-up fee
of US$60 million if it had terminated the deal after 1 January 2019 for regulatory reasons, or if
either party had terminated after the renegotiated ultimate 31 March 2019 outside date.
The extension, while increasing the risk to buyer Tonox, allowed the parties to have their day
in court – twice, in front of an administrative judge at the FTC and again before a federal court
– and ultimately allowed the deal to cross the finish line. After the June 2018 trial before an FTC
7 Matthew Perlman, Law360, EC To Investigate $2.2B Tronox-Cristal Titanium Dioxide Deal

(20 December 2017), available at www.law360.com/articles/996853/ec-to-investigate-2-2b-tronox-cristal-
titanium-dioxide-deal.
8 Plaintiff’s Memorandum In Support Of Renewed Motion For Expedited Hearing And Scheduling Order,
Tronox Ltd. v. FTC, ECF No. 14, at 2–3, 1:18-cv-00010-SA-RP (N.D. Miss 28 January 2018).
9 Tronox Ltd, Current Report (Form 8-K), Attach 99.1 (24 January 2018)(call transcript), available at
www.sec.gov/Archives/edgar/data/1530804/000114036118002989/ex99_1.htm.
91

administrative judge (but prior to a decision) the EC cleared the deal with remedies, requiring
the FTC finally to seek injunctive relief in US Federal court to prevent the parties from closing.
The FTC successfully sought a preliminary injunction in November 2018, which was followed
by the administrative judge’s decision to block the deal in December 2018. Despite these two
losses, the renegotiated outside date allowed the parties to negotiate a remedies package during
an automatic review by the full Commission, submitting a successful proposal to divest two US
plants just prior to the outside date, and closing the deal two weeks after, on 15 April 2019.10 This
result underscores that parties should be aware that timely judicial review of mergers in the
United States is only feasible where there are no regulatory obstacles against closing elsewhere,
typically once all other jurisdictions have cleared, and should take into account the likely tim-
ing of non-US reviews and additional time to litigate in the United States (at least five months)
when negotiating appropriate timing provisions into the transaction agreement.
Conclusion
As the average time for multi-jurisdictional review of international deals continues to increase,
it is important that parties have a clear-eyed view of their realistic time to clearance and provide
for an appropriate outside date accordingly. With advance planning and clear view of the time
to clearance, parties can approach their multi-jurisdictional filings strategically, to protect the
deal value and speed the time to clearance.
10 Fed Trade Comm’n, FTC Requires Divestitures by Tronox and Cristal, Suppliers of Widely Used White
Pigment, Settling Litigation over Proposed Merger (10 April 2019), available at https://www.ftc.gov/
news-events/press-releases/2019/04/ftc-requires-divestitures-tronox-cristal-suppliers-widely-used.
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09
Identifying a Suitable Divestiture Buyer and Related Issues
Steven L Holley and Dustin F Guzior1
At the outset of a transaction, horizontal overlaps or vertical integration between the merging
parties can lead to the conclusion that divestitures are likely to be necessary to resolve competi-
tion concerns. In such cases, finding a buyer for the divested business is critical in ensuring the
viability of the transaction. Certain issues related to finding a divestiture buyer are relatively
obvious – e.g., the buyer chosen to acquire the divested business should not create its own com-
petition concerns. Other issues are less obvious, but have become an increasingly important
part of the process for selecting a divestiture buyer. Antitrust agencies around the world are
increasingly focused on a prospective buyer’s capabilities (e.g., financial resources and industry
experience) to ensure that the divestiture will ‘effectively preserve competition’, which is the
keystone of a merger remedy.2 If the divestiture buyer does not have the resources or experi-
ence that will enable it to ‘step into the shoes’ of the seller, the remedy will likely be deemed
inadequate, regardless of the scope of the divestiture the seller is prepared to put on the table.
Although identification of a divestiture buyer has always been a substantial issue in the
merger clearance process, the importance of the buyer suitability analysis has grown. The fol-
lowing four recent examples from the United States illustrate this point:
• First, in 2017, the US Federal Trade Commission (FTC) published a report analysing the ‘suc-
cess’ or ‘failure’ of merger-related divestitures in the 2006–2012 time period (the 2017 FTC
Study).3 The FTC identified a number of issues warranting closer scrutiny, including the
attributes of divestiture buyers. For example, the FTC called for close scrutiny of the buyer’s:
1 Steven L Holley and Dustin F Guzior are partners at Sullivan & Cromwell LLP.
2 Antitrust Division Policy Guide to Merger Remedies at 2 (June 2011) (available at www.justice.gov/sites/
default/files/atr/legacy/2011/06/17/272350.pdf) (‘First, effectively preserving competition is the key to an
appropriate merger remedy.’) (the Antitrust Policy Guide).
3 FTC’s Merger Remedies 2006–2012: A Report of the Bureaus of Competition and Economics (January 2017)
(available at www.ftc.gov/reports/ftcs-merger-remedies-2006-2012-report-bureaus-competition-
economics) (the 2017 FTC Study).
93

• financial resources, including plans for financing the acquisition;

• business plans for running the acquired business;
• need for back-office and other corporate infrastructure support from the seller;
• need for transition service agreements and supply agreements with the seller; and
• level of knowledge and experience relevant to running the acquired business, including
the amount of due diligence conducted by the buyer.
In short, given the desire to avoid failed divestitures, parties to a transaction should expect
rigorous examination of a divestiture buyer’s ability to effectively preserve competition.
• Second, while divestiture of an ‘existing business entity’ has been a preference of US anti-
trust agencies for several years,4 the agencies have become much stricter in calling for
divestiture of a complete, ‘stand-alone’ business entity. This preference appears to flow
from a conclusion of the 2017 FTC Study that divestiture of an ‘ongoing business’ is more
likely to ‘succeed’ than a divestiture of a package of assets.5 The nature of a divestiture trans-
action, however, will often vary depending on the buyer. While a financial buyer might have
an interest in acquiring a complete, stand-alone business entity, a strategic buyer might
already have substantial resources with which to run the acquired business, and prefer an
asset acquisition that does not include redundant infrastructure. Early identification of
suitable buyers is thus important for two separate reasons: (1) the scope and nature of the
divestiture transaction will change depending on the identity of the buyer; and (2) the seller
and buyer must be prepared to explain to authorities early in the process how the divesti-
ture transaction accords with the strong preference for divestiture of an ongoing business.
• Third, in connection with the acquisition of Baker Hughes Inc by General Electric Co (GE),
GE agreed to a global divestiture of its Water & Process Technologies business to SUEZ SA. In
late 2017, GE informed the Antitrust Division of the US Department of Justice (DOJ) that it
was not able to complete the global divestiture of that business to SUEZ because licensing,
regulatory and other legal issues stood in the way of a full transfer in certain jurisdictions.
The DOJ required GE to pay what amounted to daily fines until the divestitures are com-
pleted, and the DOJ stated that it considered the delay a significant issue because the DOJ
agreed to the remedy on the understanding that ‘the buyer of the divestiture assets will step
seamlessly into the shoes of one of the merging parties and preserve the competition that
otherwise would be lost due to the merger.’6 In matters subsequent to GE/SUEZ, the DOJ has
focused on the ability of the buyer to quickly assume full control of a divested business on
a global basis – both in terms of the buyer’s existing regulatory approvals and its ability to
obtain other required regulatory approvals quickly and efficiently. And, in the recent case
of Bayer AG’s acquisition of Monsanto, the DOJ allowed the Bayer/Monsanto transaction to
close but required the companies to be held separate until global divestitures to BASF SE
are completed. This potential sea change is a direct result of the DOJ’s experience with GE/
SUEZ, and divestiture sellers should carefully scrutinise the ability of potential buyers to
4 Antitrust Policy Guide at 8 (‘[T]he Division often will insist on the divestiture of an existing business
entity that already has demonstrated its ability to compete in the relevant market.’).
5 2017 FTC Study at 21–23, 32.
6 Justice Department Requires General Electric Company to Make Incentive Payments to Encourage
Completion of Divestitures Agreed to as a Condition of Baker Hughes Merger (17 October 2017) (available
at www.justice.gov/opa/pr/justice-department-requires-general-electric-company-make-incentive-
payments-encourage).
94

quickly assume control of a global divestiture business – both to persuade authorities that
the buyer is suitable and to ensure that the seller does not suffer adverse consequences to
the main transaction.
• Finally, in the Competitive Impact Statement filed in connection with Bayer/Monsanto, the
DOJ looked carefully at the divestiture buyer’s ‘existing portfolio’ of products to evaluate:
(1) preservation of portfolio-level competition (referred to as ‘integrated competition’); and
(2) maintenance of cross-portfolio ‘scope efficiencies’ that might impact R&D and future
investments by the divestiture buyer.7 This very recent development suggests that the
divestiture buyer’s existing assets and business can play a critical role in the substantive
remedy analysis when innovation or portfolio-level competition is a concern. In cases of
this nature, the buyer’s existing resources and capabilities are relevant to far more than the
buyer’s competence. In these cases, the buyer’s resources and capabilities inform whether
it can effectively preserve competition at an enterprise level, regardless of its competence to
continue a particular divested business line.
As these points demonstrate, the ability to persuade US antitrust agencies that a particular
divestiture buyer is suitable cannot be taken for granted, especially in the case of global dives-
titures or divestitures intended to remedy complex competition concerns. Finding a suitable
divestiture buyer should not be an afterthought; that process should start early in the life cycle
of a proposed transaction to: (1) ensure that there is a viable remedy for competition concerns
arising from the transaction (e.g., as part of a preliminary risk assessment); and (2) ensure that
there is adequate time to plan for and execute the divestiture transaction based on the particu-
lar requirements of potential buyers. This chapter analyses several issues that should be con-
sidered in this process.
Identifying suitable buyers

A standard antitrust risk analysis should generally include a preliminary conclusion about
the scope of any divestitures that might be required to address competition concerns resulting
from the transaction. In some instances, the need for divestitures may be an open question, but
in other instances it will be apparent that some divestitures will be required to get the transac-
tion cleared. It is less common for this early analysis to include evaluation of potential divesti-
ture buyers and conclusions about the set of buyers that would be viewed by antitrust agencies
as capable of preserving competition. In transactions that present substantial competition con-
cerns, however, it is risky to proceed on the assumption that a buyer will eventually materialise
(e.g., if the seller is forced into a divestiture on a ‘fire sale’ basis).
US antitrust agencies are increasingly scrutinising the suitability of the divestiture buyer
proposed by the parties, and they will not approve a divestiture unless they are persuaded that
the divestiture buyer can effectively ‘step into the shoes’ of the seller as a long-term, viable com-
petitor. US antitrust agencies also frequently remind the parties to a transaction that a potential
7 Competitive Impact Statement, United States v. Bayer AG et al, No. 18-cv-01241-JEB, at 18–20 (DDC
29 May 2018) (Doc 3) (available at www.justice.gov/atr/case-document/file/1066681/download) (the
Bayer Competitive Impact Statement).
95

divestiture buyer’s interests are not necessarily aligned with those of the agency – for example,
a private equity firm might be willing to pay a substantial amount of money for a business that
can be run profitably in run-off mode, but that would not preserve competition in the long run.
The universe of suitable divestiture buyers could be quite limited, depending on the specific
issues in the case, so the parties to a transaction should identify a set of buyers that might be
acceptable to competition authorities early on. Factors that should be considered by the seller
and its counsel are explored further below. None of these factors should necessarily disqualify
a potential buyer; rather, all of the factors should be balanced as part of an overall assessment of
the risks posed by different potential buyers.
The seller should avoid creating new competition concerns

In evaluating prospective divestiture buyers, the seller should seek to identify buyers that would
not create new competition concerns (i.e., new horizontal overlaps or vertical integration).8
While creation of new horizontal overlaps or vertical integration should not disqualify a poten-
tial buyer, review of the proposed divestiture by antitrust agencies will be longer and more com-
plicated if they need to consider new competition issues or consider further divestitures that
are triggered by the initial divestiture. If there is no suitable divestiture buyer that produces
no new competition issues (or very limited ones), the divestiture seller will need to analyse the
scope of further divestitures that might be required and assess the availability of suitable buy-
ers for that new divestiture package.
In analysing horizontal or vertical issues created by a divestiture, it is helpful to consider
whether the divestiture package can be divided among more than one suitable buyer in terms
of geography or business segment. Whether such a division of the divestiture package is accept-
able to antitrust agencies will depend on the circumstances of each case. In some cases, it might
be natural to split the divestiture package into pieces – e.g., the Asia-Pacific branch and the
North America branch of a particular business operate as distinct, economically viable busi-
ness lines. In such a case, the seller could identify one set of suitable buyers able to preserve
competition in the Asia-Pacific region (likely based on the views of the relevant competition
authorities in the region), and another set of suitable buyers able to preserve competition in
North America (based on the views of competition authorities in the United States, Canada and
Mexico).9 By splitting the divestiture package in two, the seller might be able to avoid overlaps
that would have arisen if the Asia-Pacific and North America businesses both went to one com-
pany. A seller might also benefit from dividing the divestiture package if the aggregate purchase
price from more than one buyer is expected to be substantially higher than what the seller
could get from a single buyer.
8 ‘First, divestiture of the assets to the proposed purchaser must not itself cause competitive harm.’
Antitrust Policy Guide at 28.
9 A real-world example of such a split is the split of slots, gates and ground facilities at key airports
when US Airways and American Airlines made divestitures to JetBlue, Southwest, and Virgin. Justice
Department Requires US Airways and America Airlines to Divest Facilities (12 November 2013)
(available at www.justice.gov/opa/pr/justice-department-requires-us-airways-and-american-airlin
es-divest-facilities-seven-key); Reagan National routes, after the US Airways-American Airlines merger
(15 May 2014) (available at www.washingtonpost.com/lifestyle/travel/reagan-national-routes-afte
r-the-us-airways-american-airlines-merger/2014/05/15/d49008ae-d173-11e3-937f-d3026234b51c_story.
html?utm_term=.64c39d96c613).
96

In other situations, splitting a divestiture package into pieces may be a difficult sell to
authorities; for example, the split might involve a complex division of tangible and intangible
assets among the divestiture businesses, or the business in one region might provide important
support to the business in another region. In such cases, it might not be viable to divest anything
less than the entire global business. Sellers and their counsel should be particularly sensitive
to comments from antitrust agencies that reflect scepticism about the desirability of dividing a
divestiture business based on geographic regions or product lines (e.g., comments concerning
the importance of ‘global scope and scale’ or the perceived ‘complexity’ of a proposed divesti-
ture). If it is important that the divestiture package remains together as one global business,
the pool of qualified buyers will likely be more limited because of an increased probability of
creating new horizontal or vertical issues, and because the buyer will need to have the financial
resources and infrastructure needed to assume control of a global business.
If the seller concludes that the divestiture will likely need to consist of an entire global
business, the seller should evaluate all of the antitrust approvals from national competition
authorities that will be required to effectuate the divestiture with regard to each possible buyer.
This is important because the divestiture seller and buyer could encounter conflicting substan-
tive views from different competition authorities in the divestiture buyer approval process. As
one example, the parties might find themselves in a situation in which the United States has
required a global divestiture, but that global divestiture creates a horizontal overlap in a foreign
jurisdiction. As a second example, the parties could find themselves in a situation where the
divestiture creates a global overlap, but the competition authorities in different jurisdictions
have different degrees of concern about that overlap. Such issues will inevitably increase the
length and complexity of the merger clearance process, so they should be considered in the ini-
tial evaluation of potential buyers – the simpler the divestiture seller can make the transaction,
the better. In situations where a complexity cannot be avoided, the parties should identify rem-
edy conflicts as early as possible. The parties do not want to find them themselves in a Catch-22,
where one authority is procedurally ‘locked in’ to a particular remedy that another jurisdiction
cannot accept.
Separately, the divestiture seller should consider any history of alleged or sanctioned coor-
dinated conduct between either merging party and a potential divestiture buyer.10 If there has
been a prior antitrust investigation or sanction concerning collusion between these parties,
they will face scrutiny from antitrust agencies about whether they can be trusted to aggres-
sively compete with one another after the divestiture, especially if the divestiture will require
ongoing service or supply arrangements between the parties, which antitrust agencies might
view as ‘ongoing entanglements’. More generally, even if there is no specific history of coordi-
nated conduct between the divestiture seller and divestiture buyer, the divestiture seller should
at least be aware of any allegations of coordinated conduct in the relevant industry that could
be raised by antitrust agencies and factor that possibility into the overall screening of poten-
tial buyers. As with the two issues discussed above (i.e., creation of new horizontal and vertical
10 ‘Division attorneys reviewing fix-it-first remedies carefully screen the proposed divestiture for any
relationships between the seller and the purchaser, since the parties have, in essence, self-selected the
purchaser.’ Antitrust Policy Guide at 22.
97

issues, and foreign merger clearance complexity), the presence of historical coordination issues
should not be considered a disqualifying factor, but needs to be part of the overall risk analysis
when looking at potential divestiture buyers.
The seller should carefully evaluate the buyer’s capabilities

In evaluating potential divestiture buyers, the seller should also consider the buyer’s existing
resources and experience. Competition authorities will ultimately be evaluating these same
issues, and they ‘must be certain that the purchaser has the incentive to use the divestiture
assets to compete in the relevant market’11 and must ‘ensure that the purchaser has sufficient
acumen, experience, and financial capability to compete effectively in the market over the long
term’.12 At a minimum, the seller should consider a potential divestiture buyer’s:
• financial resources;
• employee base and experience, and expertise in the relevant industry;
• facilities and other tangible assets;
• intellectual property rights and other intangible assets;
• existing or pipeline products that are complementary to the divestiture business; and
• regulatory approvals relevant to the divestiture industry.
Each of these factors will not necessarily be relevant in every case, but the seller and its counsel
should evaluate them all in light of the particular circumstances presented. For example, if the
divestiture consists of a stand-alone gravel business in Minnesota, the only relevant question
might be whether the purchaser has sufficient financial resources and a satisfactory business
plan to continue its operation. In contrast, if the primary concern is innovation competition, it
might be necessary to find a buyer that meets all of the criteria and has a demonstrated history
of innovation in the relevant industry.
Five more points warrant specific mention.
First, the financial resources of the divestiture buyer will be relevant in almost every case.
Recent cases of divestiture ‘failure’ have made US antitrust agencies particularly sensitive to
this issue. For example, when Hertz Corp acquired Dollar Thrifty Automotive Group Inc in 2013,
the FTC required Hertz to divest its Advantage Rent A Car business (with a fleet of 24,000 vehi-
cles) to Simply Wheelz LLC, a wholly owned subsidiary of Franchise Services of North America.
Simply Wheelz filed for bankruptcy a few months after the divestiture was completed, in part
because of financial hardships imposed by the divestiture agreement itself, and Simply Wheelz
ended up selling certain divestiture assets back to Hertz. Similarly, when Albertsons LLC and
Safeway Inc merged in 2014, they sold 168 supermarkets to Haggen Holdings LLC (Haggen) as
part of a settlement with the FTC. One year later, Haggen filed for bankruptcy, and many of the
168 supermarkets would have closed had they not been sold back to the combined Albertsons/
Safeway. After these experiences, a divestiture seller should expect US antitrust agencies to scru-
tinise closely the divestiture buyer’s financial resources and specific financing arrangements
11 ‘Second, the Division must be certain that the purchaser has the incentive to use the divestiture assets
to compete in the relevant market.’ Antitrust Policy Guide at 28–29.
12 ‘Third, the Division will perform a “fitness” test to ensure that the purchaser has sufficient acumen,
experience, and financial capability to compete effectively in the market over the long term.’ Antitrust
Policy Guide at 29.
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for the acquisition. The buyer’s ‘deep pockets’ (e.g., access to funding from a large private equity
fund), however, will not be dispositive on this issue. US authorities are increasingly interested
in reviewing a proposed buyer’s business plan for the divestiture business.13 Thus, in evaluat-
ing potential divestiture buyers, the seller should consider both the buyer’s general financial
resources to acquire and support the business and its ability to put together a long-term busi-
ness plan that will be compelling to competition regulators.
Second, the back-office operations or general corporate infrastructure available to the
divestiture buyer will be relevant in almost all cases. Regardless of the nature of the divestiture
business, it very likely will require some form of back-office operations or general corporate
infrastructure; for example, payroll, accounting, human resources, customer order systems,
information technology systems, general office space, and maintenance and security person-
nel. If the seller is divesting a true stand-alone business entity with all of the related back-office
support and general corporate infrastructure, the existing resources of the buyer will be far
less relevant. For example, if the stand-alone gravel business in Minnesota, discussed above, is
sold to a private equity buyer along with all of the business’s corporate infrastructure, it would
not matter whether that buyer has existing back-office operations. In many cases, however, the
divestiture business will not include back-office operations or general corporate infrastructure
because the divestiture business is part of a larger corporate structure. In those cases, the seller
should evaluate whether the potential divestiture buyer has existing back-office operations or
infrastructure that the divestiture business can be ‘plugged into’. If not, the seller will need to
consider: (1) transferring some of its own back-office operations and infrastructure resources to
the divestiture buyer; or (2) identifying third-party solutions that can be used to provide similar
support.14 While this issue should not disqualify a potential divestiture buyer, the seller should
carefully evaluate the relative capabilities of different potential divestiture buyers based on
their existing back-office operations and general corporate infrastructure. The parties will need
to persuasively explain to competition agencies how the divestiture business will receive such
general corporate support when it is ‘unplugged’ from the seller’s organisation.
The divestiture seller should carefully evaluate the existing capabilities of each potential
divestiture buyer to determine the nature and extent of transition services, supply and tolling
agreements that the buyer might request to run the divestiture business. Although US anti-
trust agencies have mixed views concerning such agreements – on the one hand, they can be
viewed as ongoing ‘entanglements’15 and on the other hand, they help the divestiture buyer
compete more effectively – they are likely to accept any transition services, supply and tolling
13 FAQ About Merger Consent Order Provisions (available at www.ftc.gov/tips-advice/competition-

guidance/guide-antitrust-laws/mergers/merger-faq).
14 The ‘third-party solution’ approach recently was closely scrutinised by DOJ in connection with
Bayer’s acquisition of Monsanto. The Proposed Final Judgment in that case requires Bayer to make
fairly burdensome representations and commitments in connection with back-office and corporate
infrastructure services to be provided by a third-party, Tata Consultancy Services. Proposed Final
Judgment, United States v. Bayer AG et al, No. 18-cv-01241-JEB, (DDC 29 May 2018) (Doc 2-2 at Section
IV(H)(2)) (available at www.justice.gov/atr/case-document/file/1066676/download).
15 Agency Decision-Making in Merger Cases, Organisation for Economic Cooperation and Development
(17 November 2016) at 4 (available at www.ftc.gov/system/files/attachments/us-submissions-oecd-other-
international-competition-fora/agency_decision-making_in_mergers_united_states.pdf) (the
OECD Report).
99

agreements the divestiture buyer says are necessary for it to operate the divestiture business
on day one. Also, the divestiture seller should expect to provide the goods and services called
for by such agreements at no more than variable cost. Given such unattractive financial terms,
the seller should carefully evaluate the likely requirements of each potential divestiture buyer
– some buyers will require a lot of support, while others will require very little, and there is no
benefit to the divestiture seller in devoting resources to providing such support while making
no profit in doing so.
Third, a divestiture buyer’s experience and expertise relevant to running the divestiture
business is likely to be an issue in every case. Even in the extreme example of the stand-alone
gravel business in Minnesota, it is unlikely that the divestiture seller will be transferring its
most senior executives to the divestiture buyer, and they are often those with the longest ten-
ure and greatest knowledge of the relevant industry. While relevant experience and expertise
will typically go to the divestiture buyer as employees transfer to run the divestiture business,
the antitrust agencies will still be interested in whether the buyer has the executive-level team
needed to guide the business over the long term. In the case of a strategic buyer that is in the
same industry as the divestiture business (or an adjacent industry), executive expertise gener-
ally should not be a concern. The concern would arise only when the divestiture buyer has no
prior experience in the relevant industry (or an adjacent industry), such as a financial buyer
that would be entering an entirely new business. A purely financial buyer can make itself more
attractive by recruiting relevant executive talent – for example, a retired CEO or other senior
executive of a company that competes with the divestiture seller. In evaluating potential buy-
ers, a seller and its counsel should question buyers (especially financial buyers) about how they
plan to address the issue of industry experience and expertise.
Fourth, in a highly regulated industry such as pharmaceuticals or industrial chemicals,
a buyer’s existing licences, registrations and permits relevant to the divestiture business – or
its ability to obtain such required government approvals quickly – should feature promi-
nently in a seller’s analysis of potential buyers, especially in light of the DOJ’s recent experi-
ence with GE/SUEZ. A divestiture seller in a regulated industry should first analyse all of the
regulatory approvals relevant to the divestiture business (e.g., production site, active ingredi-
ent, formulation registrations with the US Environmental Protection Agency or the US Food
& Drug Administration), and any other government approvals required to run the divestiture
business (e.g., site licences or environmental permits). The seller and its counsel should then
evaluate which of those government approvals can be transferred to a divestiture buyer, and if
the approval can be transferred, what qualifications the buyer must have for a transfer to be
approved. This work can then be used to identify a set of potential buyers that could realistically
take control of the divestiture business quickly and efficiently.
There will likely not be any existing buyer that already has all approvals necessary to run the
divestiture business or to which all of the seller’s approvals can be transferred. In those cases,
the parties can arrange transition service and reverse transition service agreements that will
allow the buyer to operate under approvals held in the seller’s name until the buyer can obtain
its own approvals.16 The antitrust agencies, however, will expect the divestiture buyer to work
hard to obtain its own approvals quickly. If a proposed buyer does not have prior experience
16 See Proposed Final Judgment, United States v. Bayer AG et al, No. 18-cv-01241-JEB, (DDC 29 May 2018)
(Doc 2-2 at Section IV(L)) (available at www.justice.gov/atr/case-document/file/1066676/download).
100

and demonstrable success in obtaining similar approvals in the relevant industry, it should
be prepared to explain, on a country-by-country basis, how it expects to obtain the approvals
required to take control of the divestiture business. If a divestiture buyer cannot formulate such
a detailed plan, this will be a significant issue that the seller should take into account because
the authorities will be highly sceptical that the buyer is suitable, especially following GE/SUEZ.
Moreover, the divestiture seller is at substantial risk itself if the divestiture buyer experi-
ences any delay in obtaining the government approvals required to take control of the dives-
titure business.17 Although GE was subject to what amounted to a daily fine until the divesti-
tures were completed, the merging parties in Bayer/Monsanto have suffered the fall-out from
the DOJ’s bad experience in GE/SUEZ. The Hold Separate Stipulation and Order in Bayer/
Monsanto allowed Bayer and Monsanto to close their transaction, but Bayer is required to
hold all of Monsanto separate until the required global divestitures are completed.18 While the
divestiture timing issue in Bayer/Monsanto is caused by review of the divestiture package by
foreign competition regulators, rather than the need for the divestiture buyer to obtain regis-
trations, permits and licences, there is good reason to expect US antitrust agencies to adopt a
similar approach when confronted with another regulatory situation analogous to GE/SUEZ.
Accordingly, in evaluating divestiture buyers in regulated industries, the seller should consider
the buyer’s existing government approvals and ability to obtain such approvals quickly and effi-
ciently for two reasons: (1) it speaks to the suitability of the buyer; and (2) it protects the seller
from suffering adverse consequences if the divestiture buyer cannot take control of the divesti-
ture business in a timely manner.
Finally, in cases raising complex competition concerns (e.g., innovation competition or
portfolio-level competition), the divestiture seller should carefully scrutinise a potential dives-
titure buyer’s existing product portfolio and pipeline of R&D projects, as well as the buyer’s his-
tory of innovation in the relevant industry. In these complex cases, the authorities will need to
be persuaded not only that the buyer will maintain the competitiveness of a particular divested
business, but that the buyer can ‘step into the shoes’ of the seller in terms of maintaining
enterprise-level competition. If the buyer is not able to do so, the authority will reject the rem-
edy proposal even if it technically resolves all horizontal overlaps between the merging firms.
For example, in April 2015, Applied Materials Inc and Tokyo Electron Ltd abandoned their plans
to merge because their divestiture proposal failed to resolve the DOJ’s innovation competition
concerns.19 The parties were the largest and second-largest providers of non-lithography semi-
17 In addressing the GE/SUEZ issue, the DOJ noted: ‘To ensure that competition is preserved, merging
companies must commit to completing the required divestiture in a timely fashion and, in return, they
are allowed to consummate their merger before the divestiture is finalized. In this case, GE signed a
Hold Separate Stipulation and Order in which it agreed to make a prompt, complete divestiture and was
allowed to consummate its merger with Baker Hughes on July 3. However, GE is now unable to comply
with the timing it committed to in its original settlement with the Department.’ Justice Department
Requires General Electric Company to Make Incentive Payments to Encourage Completion of Divestitures
Agreed to as a Condition of Baker Hughes Merger (17 October 2017) (available at www.justice.gov/opa/pr/
justice-department-requires-general-electric-company-make-incentive-payments-encourage).
18 Stipulation and Order, United States v. Bayer AG et al, No. 18-cv-01241-JEB, (DDC 29 May 2018) (Doc 2-1 at
Section VII) (available at www.justice.gov/atr/case-document/file/1066666/download).
19 Agency Decision-Making in Merger Cases, Organisation for Economic Cooperation and Development
(17 November 2016) at 4 (available at www.ftc.gov/system/files/attachments/us-submissions-oecd-other-
international-competition-fora/agency_decision-making_in_mergers_united_states.pdf).
101

conductor manufacturing equipment, and they had offered to divest overlapping tool lines to
the Innovation Network Corporation of Japan (INCJ), a public–private partnership supervised
by the Ministry of Economy, Trade and Industry of Japan, which would provide capital and man-
agerial support to the divested businesses. The DOJ, however, was primarily concerned with
head-to-head innovation competition between the merging parties for development of equip-
ment to be used in producing next-generation semiconductors, and DOJ was not persuaded that
INCJ had the incentives and abilities to continue that innovation competition, even with a com-
plete divestiture of all overlapping business lines between the merging parties.
In contrast to Applied Materials/Tokyo Electron, the DOJ recently approved a significant
divestiture to BASF SE (BASF) in connection with Bayer’s acquisition of Monsanto, where the
DOJ’s primary concern was the preservation of innovation and portfolio-level enterprise com-
petition that existed between Bayer and Monsanto in the crop science business. In its competi-
tive impact statement, the DOJ noted that:
• ‘BASF already has extensive agricultural experience’;
• ‘[c]ombining the businesses and assets being divested with BASF’s existing portfolio will
allow it to become an integrated player and an effective industry competitor . . .’; and
• the divestiture of complementary assets, in light of BASF’s existing portfolio, will give BASF
‘scale and scope benefits to the divested GM seeds and trait business’ will ‘preserve the
scope efficiencies that Bayer enjoys today’ and will ‘preserve BASF’s incentives to pursue
[Bayer’s] innovations’.20
In Bayer/Monsanto, BASF was a perfect divestiture buyer: ‘BASF already has extensive agricul-
tural experience, but it lacks a seeds and traits business.’21 While BASF had all of the capabilities
needed to continue enterprise-level competition, BASF did not have assets that would have cre-
ated significant new competition problems resulting from horizontal overlaps on a more granu-
lar level. While the ideal purchaser might not be available in every situation, a divestiture seller
in a transaction raising complex competition concerns should seek as much as possible to
strike the right balance between competing interests – i.e., balance a buyer’s relevant industry
experience with potential new competition concerns created by the buyer’s existing business.
As the examples above demonstrate, the selection of a suitable divestiture buyer can be
difficult in cases involving enterprise-level competition. While the analysis of this issue is
dependent on the facts of a given case, there are at least three guiding principles to consider:
(1) the degree to which the seller can plausibly argue that the divestiture buyer has sufficient
resources available to continue investment in acquired R&D projects based on resources gen-
erated by complementary acquired businesses or existing complementary businesses; (2) the
degree to which the seller can demonstrate the buyer has a history of significant R&D invest-
ment in the same industry as the divestiture business; and (3) the degree to which the buyer
has a set of existing products that, together with the acquired assets, could fairly be viewed as
a broad-based portfolio. None of these are easy questions, but in transactions that are likely to
raise such issues, the seller and its counsel should engage in a rigorous analysis early in the life
cycle of the transaction.
20 Bayer Competitive Impact Statement at 18–23.

21 Id. at 18. (Emphasis added.)
102

The seller should still conduct an auction

Despite the substantive considerations outlined above, the divestiture seller should still con-
sider holding a robust auction to avoid a ‘fire sale’ to an unnecessarily restricted set of bidders.
Even if there is one obviously superior candidate, it is usually a bad idea to let that buyer think
it has no competition in the divestiture process. Thus, the factors outlined above should not be
used as disqualifiers (or definitive selectors); rather, the factors should be used to assess the rel-
ative risk associated with potential buyers. While certain candidates might obviously be unac-
ceptable, in most cases relative antitrust risk will be only one consideration in selecting the
buyer. To avoid a situation where the pool of auction participants is unnecessarily restricted,
the seller might consider consulting competition authorities for their input only after final
offers are submitted. The views of the authorities could then be one of several factors used in
selecting a buyer, but the timing of the authority’s views would not unnecessarily restrict the
seller from running a competitive auction (e.g., if the agencies express a strong preference for
only one buyer).
Choosing transaction mechanics

Once a set of potentially suitable buyers is identified, the seller should consider how the identity
of the ultimate buyer will impact the transaction mechanics – i.e., whether the transaction pro-
ceeds as an asset sale or a sale of a complete, stand-alone business entity. While a private equity
buyer might be interested in buying a stand-alone business entity, complete with back-office
operations and corporate infrastructure, in most cases the buyer will be interested in taking
something less than a complete, stand-alone business entity because the buyer already has
redundant resources it can use to run the divestiture business. The set of assets the divestiture
buyer wants to take, of course, will depend on what the divestiture buyer already has. Thus, in
evaluating potential buyers, the seller should consider the assets available to the buyer in the
context of what the overall divestiture transaction will look like.
This issue has become more prominent because of the strong preference of US authorities
for divestiture of an entire ongoing business or existing business entity.22 With respect to the
concept of an ongoing business, the FTC explained the following in the 2017 FTC Study:
Most of the packages of assets labeled as ‘on-going businesses’ had not, however,
actually been operated as autonomous businesses before the divestiture; neverthe-
less, they were characterized this way because the market share attributed to the
assets could be transferred immediately and potentially for the long-term. A buyer
could buy and be operational the next day, selling to all of the same customers.23
While a complete analysis of this issue is beyond the scope of this chapter, the DOJ appears to be
departing from the FTC’s explanation in recent mergers – instead, the DOJ has adopted a more
literal interpretation of ‘existing business entity’. For example, in at least one recent case, the
DOJ has taken the position that unless the seller divests a literal stand-alone business entity
(i.e., through a sale of shares in the relevant legal entity or entities), the divestiture should be
22 2017 FTC Study at 12; Antitrust Policy Guide at 8.

23 2017 FTC Study at 3, n. 8.
103

viewed as an asset sale that warrants close scrutiny.24 The impact of this position on divestiture
sellers is that the seller needs to evaluate at an early stage how it can structure a divestiture to a
strategic buyer – the scope of which will depend on the particular assets and personnel already
available to the buyer – in a way that will be palatable to the antitrust agencies.
We have three suggestions for how a seller might handle this issue.
First, the seller should define the divestiture business in broad terms (e.g., the global busi-
ness or researching, developing, manufacturing and selling XYZ industrial chemical), and start
with the premise that the divestiture will include all tangible and intangible assets used in the
XYZ chemical business and all employees supporting the XYZ chemical business. From that
starting point, the seller should evaluate what can be taken out of the transaction scope because
of a particular buyer’s existing resources. For example, if a particular buyer is already involved
in the manufacture and sale of industrial chemicals, the buyer might have no interest in pur-
chasing additional equipment that is used to manufacture or formulate industrial chemicals.
Instead of taking that equipment from the divestiture seller (which the divestiture seller might
prefer to keep for other non-divested businesses in any event), the divestiture buyer might
want to transition the XYZ chemical into its existing production line. Similarly on the human
resources side, the buyer might already have a global industrial chemical R&D organisation,
into which it can easily onboard R&D for the XYZ chemical without a need for additional R&D
employees from the divestiture seller. The simpler human resources examples, of course, are
where the buyer already has a payroll or accounting department and does not need the seller’s
back-office operations or where the buyer already has ‘C-Suite’ executives with relevant indus-
try experience and thus does not need the seller’s executives.
Although these scenarios might seem intuitive, they can be very difficult to explain if
antitrust agencies adhere strictly to the concept that the only appropriate divestiture is a
stand-alone business entity that will be ‘plug and play’ for any divestiture buyer. The divesti-
ture seller and potential buyer should start early in the process to prepare a plan to explain the
proposed divestiture to the antitrust agencies. More specifically, the divestiture seller should
catalogue all of the assets used in the divestiture business and all of the human resources
supporting the divestiture business, and note all such resources that will not be included in
the divestiture package because of the resources already available to a particular buyer. Then,
for each excluded item, the potential buyer should explain how it intends to account for each
excluded asset or employee with existing resources. While this process might seem cumber-
some, it will speed up the process of explaining why a particular collection of assets should
be viewed as a complete, stand-alone business. Ultimately, the divestiture buyer will need to
explain to the antitrust agencies why it agreed to exclude certain assets and personnel so the
exclusions will not be perceived as attempts by the seller to retain assets or personnel to the det-
riment of the divestiture business. To strengthen that presentation by the buyer, the divestiture
seller should ensure that the buyer has access to information about all of the assets used in the
divestiture business and all of the personnel supporting the divestiture business so the buyer
can persuade the antitrust agencies that it has made fully informed decisions.
Defining the assets that will be excluded from the divestiture of a complete ‘ongoing busi-
ness’ in light of the particular resources of the buyer can be a time-consuming exercise, and the
complexity of the process will vary depending on the identity of the buyer. The seller should
24 See Bayer Competitive Impact Statement at 16.
104

therefore consider early on what the divestiture transaction mechanics might look like depend-
ing on the divestiture buyer selected. In this process, the divestiture seller and its counsel also
should consider the threshold issue of whether the proposed asset package is too minimal
to be accepted by US antitrust agencies, even if that package might be what a potential buyer
would want or accept. For example, when Office Depot and Staples attempted to merge, the par-
ties offered a divestiture of a substantial customer contracts to office supply wholesalers, but
did not offer to transfer substantial additional tangible or intangible assets or to provide sub-
stantial transitional or other support to the buyers. The merging parties then argued that the
amount of business provided by the transferred contracts was enough for the divestiture buyer
to compete at the same level as the merging parties.25 The FTC rejected this proposed remedy
and successfully sued to enjoin the transaction. While there were other competition concerns
in Office Depot/Staples, it can be viewed as a case where the remedy put on the table was simply
too ‘bare bones’ to be taken seriously by the FTC, even if the divestiture buyer was willing to take
only the contracts and nothing more. In short, divestiture sellers and their counsel need to take
a realistic look at whether the asset package assembled for a particular buyer can plausibly be
held out as a viable, ongoing business.
Second, if US authorities might view the divestiture transaction as an asset sale, the divesti-
ture seller should consider the safety measures it might be required to include in the transaction
documents, which depend on the buyer’s experience in the relevant industry. For example, in
Bayer/Monsanto, BASF did not previously have a seeds and traits business, and the DOJ required
that Bayer give BASF three safety measures in connection with divestiture of Bayer’s seeds and
traits business: (1) the DOJ required Bayer to provide a comprehensive asset sufficiency war-
ranty that the divested assets were sufficient to maintain the viability and competitiveness of the
divested businesses; (2) the DOJ required that Bayer provide a one-year asset look-back right to
BASF, under which BASF could request additional Bayer assets used in the divested businesses
if they were reasonably necessary to the competitiveness of the divested businesses; and (3) the
DOJ required that Bayer give BASF the right to request further information about employees
who supported the divested business and the right to hire any such employees for one year after
closing.26 It is difficult to tell whether these requirements will become the ‘new normal’ in any
deal the US antitrust agencies deem an asset sale, or if they are instead specific to unique issues
presented by the Bayer/Monsanto transaction. Whatever the case may be, a divestiture seller in
an asset sale should consider proactively providing certain safety measures to the buyer to ease
the remedy review process, especially if the buyer will be entering a business area in which it did
not previously participate. These safety measures can be key in persuading antitrust agencies to
accept a proposed remedy that they might otherwise deem a risky asset sale.
Consistent with the concept of providing such safety measures, the divestiture seller would
be well-advised as a general matter that divestiture transaction documents will not necessarily
resemble the product of hardball commercial negotiations in normal circumstances. Indeed,
the FTC has said it will closely scrutinise the due diligence process to assess whether the dives-
titure buyer had adequate time and resources to analyse the divestiture transaction.27 And, as
25 OECD Report at 5.
26 See Proposed Final Judgment, United States v. Bayer AG et al, No. 18-cv-01241-JEB, (DDC 29 May 2018)
(Doc 2-2 at Sections IV(E) and IV(F)).
27 2017 FTC Study at 25, 34.
105

noted above, the antitrust agencies will take a close look at transaction documents to ensure
that they do not unfairly impinge upon the buyer’s financial ability to continue operating the
divestiture business over the long term. Regardless of the identity of the divestiture buyer –
whether a private equity firm or the seller’s strongest competitor – the seller’s goal should be to
obtain the best commercial result possible, consistent with the divestiture buyer being put in
a position to fully and effectively replace the seller’s competitive presence in the marketplace.
To that end, the divestiture seller should avoid provisions that are adverse to the divestiture
buyer, even if the seller might try to include such provisions in transaction documents under
normal circumstances.
Third, under the right circumstances, a divestiture seller might consider packaging assets
into a stand-alone legal entity that could be transferred to a buyer pursuant to a relatively simple
share purchase and sale agreement. This approach would satisfy the preference of US authori-
ties for a clean and simple divestiture of a stand-alone business entity, and could be appropriate
in those situations where the seller can reasonably predict the set of assets that buyers would
want as part of the divestiture package. While this approach could be accused of elevating form
over substance, there are several ways in which it is not merely a matter of form:
• The new legal entity would own all of the assets and employ all of the personnel significant
to its business – for example, the XYZ industrial chemical business. Support provided to the
new legal entity could be clearly defined through standard intercompany contracts within
the corporate organisation (e.g., accounting and payroll support or general tolling support).
The benefit of this approach is that the parties could clearly explain to the antitrust agen-
cies the set of assets being transferred, and also explain easily how existing intercompany
arrangements can be replaced by similar arrangements within the buyer’s corporate organi-
sation, similar arrangements with a third-party service provider or transition service agree-
ments between the buyer and seller until an independent solution can be implemented.
• If the new legal entity is set up sufficiently in advance, it could be used to run the divested
business for a period of several months while the investigation of the main transaction
proceeds. The seller could use that history to demonstrate that the entity holds the assets
necessary to maintain the competitiveness and viability of the divested business, with gen-
eral support provided by the larger corporate organisation that will be replaced fully by the
buyer. This could substantially reduce doubts about whether the ‘right’ collection of assets
is included.
• If the new legal entity is set up in advance, the seller could also apply for registrations, per-
mits or licences that the new legal entity might require, or apply for transfer of existing
approvals to the new entity. In regulated industries, this could eliminate some of the com-
plexity associated with transfer of the business. Many government approvals that cannot be
transferred outright from one entity to another will remain fully valid if the buyer instead
acquires an existing legal entity that has its own registration, licence or permit.
• Finally, the structure of the divestiture transaction would be much less complex. If set up
correctly, the divestiture transaction itself would be the sale of all shares in the new legal
entity to the divestiture buyer. This could both simplify investigations by competition
authorities and simplify negotiation of a consent decree with the DOJ or FTC because the
definition of the divestiture business would be coextensive with the new legal entity.
106

It remains to be seen if the literal interpretation of ‘existing business entity’ by US antitrust

agencies will persist, but as long as it does, a divestiture seller should evaluate how the existing
resources of a potential divestiture buyer will affect the structure of the divestiture transaction
and how the divestiture seller and buyer might best explain the proposed divestiture consistent
with the stated preference for divestiture of an ‘existing business entity’. Given the potential
complexity of this process, and the amount of time it can consume, the divestiture seller should
start the process as soon as possible when evaluating potentially suitable divestiture buyers.
Timing considerations
Once suitable divestiture buyers have been identified and appropriate transaction mechanics
have been considered, it is equally important to consider timing: when to identify a buyer and
seek approval of the divestiture from competition authorities. Broadly speaking, there are two
approaches: ‘fix-it-first’ and ‘wait-and-see’.
Under a fix-it-first approach, the divestiture seller will attempt to assemble a divestiture
package that addresses all competition concerns with the main transaction, and then identify
a buyer for that divestiture package. Typically, the seller and buyer will execute transaction
documents that: (1) are conditioned on approval of the main transaction; (2) are conditioned
on approval of the divestiture buyer by competition authorities; and (3) allow flexibility to alter
the scope of the divestiture package based on feedback from competition authorities. If a fix-it-
first approach is adopted, it is critical to maintain flexibility in each of these elements because
the reviewing authorities have not yet provided feedback on the scope of the remedy they will
require or the suitability of the proposed buyer. Separately, if there is a risk that a new horizon-
tal or vertical issue could arise from sale of the divestiture business to the fix-it-first buyer, it is
important that the transaction documents put appropriate antitrust-related divestiture obli-
gations on the divestiture buyer. It is pointless for the divestiture seller to design an effective
remedy package and identify an appropriate buyer, if only to later discover that the divestiture
buyer is not willing to move forward with the transaction because of an additional divestiture
that will be required from its own business.
The main risk associated with the fix-it-first approach is that it requires a prediction about
the scope of the ultimate divestiture package and the acceptability of the chosen buyer. If feed-
back from competition regulators is obtained only very late in the process, it is possible that
integration planning activities will have occurred that make changes difficult or impossible
(e.g., applications for certain registration or permit transfers are already submitted on the basis
of certain assumptions). Similarly, in global divestitures, if competition regulators provide feed-
back at different time points, the divestiture seller could find itself shooting at a moving target,
and perhaps facing inconsistent instructions. A separate, but related risk, is that a competition
authority might take offence at the fix-it-first approach, which could delay review of the trans-
action or create hostility. This risk can be managed, however, by assuring relevant competition
regulators that the divestiture transaction can be changed, and the initial deal struck with the
divestiture buyer should be seen as a proactive effort to start the process. Overall, it is important
that no irreversible steps be taken to execute on a fix-it-first remedy until all relevant competi-
tion regulators have provided their views. While the fix-it-first approach should approximate
the likely divestiture as closely as possible, it should not kill the transaction by cementing in
place a remedy that might not be acceptable to the authorities.
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The main benefit associated with a fix-it-first approach is that a concrete remedy proposal
can be offered to the competition regulators, making it clear that crafting a remedy is indeed
feasible. Moreover, from a US litigation perspective, the parties will enjoy a favourable position
under Arch Coal and related cases.28 Those cases explain that if a concrete remedy proposal is
provided early enough in the antitrust agency’s investigation, the antitrust agency will need to
carry its initial litigation burden with respect to the main transaction taking into account the
remedy that was presented by the parties. In contrast, if the parties wait to enter into a transac-
tion with a divestiture buyer, the antitrust agency will be able to argue that the court should
not consider any proposed remedy because it is not certain to occur.29 In transactions that raise
substantial competition issues, where litigation is at least a possibility, the parties may be
well-served to adopt a fix-it-first approach.
Of course, adopting a fix-it-first approach may very well delay review of the main transac-
tion. The antitrust agencies will almost certainly want to investigate the remedy, including
a detailed investigation of the divestiture buyer. The parties should be prepared for: (1) civil
investigative demands seeking documents, interrogatory responses and depositions designed
to investigate the capabilities of the divestiture buyer; (2) requests for detailed business plans
from the divestiture buyer for the divestiture business; and (3) meetings between executives
of the divestiture buyer and the antitrust agency as part of the investigation of the main trans-
action. Even if the parties to the main transaction have substantially complied with a Second
Request, the DOJ or FTC can issue civil investigative demands to investigate additional issues,
including the proposed divestiture purchaser.30 These additional investigations will extend the
timeline for approval of the main transaction. Whether that delay is acceptable can be consid-
ered after a weighing up of the costs and benefits associated with the fix-it-first approach, as
described above.
The alternative to the fix-it-first approach is to ‘wait-and-see’ whether the antitrust agency
requires a divestiture. The obvious disadvantages to this situation are: (1) an extremely tight
timeline to hold an auction and identify a suitable buyer for the divested business; and (2) heavy
involvement by competition regulators in the mechanics of the auction and negotiation of the
transaction documents. In these circumstances, the fire sale nature of the process will be obvi-
ous to the potential buyers – as will the involvements of the antitrust agency in the process as
referee – and that could lead to substantial value leakage.
Moreover, the wait-and-see approach could lead to substantial delays in integration of the
parties to the main transaction if the case involves global divestitures. Traditionally, the parties
to the main transaction have been permitted to integrate pursuant to a stipulation and order
pending entry of a consent decree by the court, while the divestiture business is held sepa-
rate until it is transferred to a suitable buyer. While there is no reason to expect this process
28 FTC v. Arch Coal Inc, No. 04-0534 (JDB), Mem Op at 6–8 (DDC 7 July 2004).
29 See David Gelfand and Leah Brannon, A Primer on Litigating the Fix, 31 Antitrust 10, 10 (2016) (available at
http://awa2017.concurrences.com/IMG/pdf/3._d._gelfand_and_l._brannon_-_a_primer_on_litigating_
the_fix.pdf).
30 Antitrust Division Manual, Fifth Edition, III-46 (available at www.justice.gov/atr/file/761141/download)
(‘CIDs can also be served on parties to supplement the second request, although obtaining timely
production of material so requested may prove problematic’).
108

to change in relatively simple cases (e.g., sale of a stand-alone gravel business in Minnesota),
there are signs that the traditional approach is changing in the case of complicated interna-
tional transactions.
As described above, following the DOJ’s experience with GE/SUEZ, it required Bayer to hold
all of Monsanto separate until all required divestitures to BASF are completed. This represents
a potential sea change that could make a fix-it-first approach strongly preferable in transactions
likely to require global divestitures subject to review by numerous national competition author-
ities. Under a fix-it-first approach, the divestiture buyer is identified early in the review process,
and the parties can work to ensure that the divestiture buyer has all regulatory approvals (both
antitrust and non-antitrust) around the world lined up to take control of the divestiture busi-
nesses before the closing of the main transaction, or at least soon after. This will ensure that the
parties to the main transaction are not left in a hold separate while these approvals, which are
specific to the particular divestiture purchaser, are obtained.
As with the identification of suitable divestiture buyers and the selection of an appropri-
ate structure for the divestiture transaction, the timing for identifying a divestiture buyer will
depend on the specifics of a given transaction. In relatively complex cases, a divestiture seller
should strongly consider a fix-it-first approach given potential timing problems created by a
wait-and-see approach. In less complex cases, a divestiture seller might have more leeway to
choose between the two approaches, but as described above, there are still substantial ben-
efits to pursuing a fix-it-first approach in terms of the substantive presentation of the anti-
trust agencies.
Conclusion
While the scope of a divestiture package has traditionally received significant attention when
analysing the antitrust risk presented by a proposed transaction, the analysis of suitable dives-
titure buyers has received relatively less. US antitrust agencies, however, have recently empha-
sised that they will scrutinise both the scope of divestiture and the capabilities of proposed
divestiture buyers as part of their overall analysis of whether to accept a proposed remedy. This
development places new importance on identifying a suitable divestiture buyer and putting in
place a structure for the divestiture transaction that makes it clear that the particular divesti-
ture buyer has what it needs to run the divested business in a viable manner. By following the
guidelines suggested above, divestiture sellers can better position themselves to manage anti-
trust risk and, hopefully, speed the process of getting their divestiture package and divestiture
buyer approved by competition agencies.
109

10
Giving Effect to the Remedy
David Higbee, Djordje Petkoski, Geert Goeteyn, Sara Ashall, Özlem

Fidanboylu, Caroline Préel and John Skinner1
Introduction
Remedies are an important aspect of merger control because a large proportion of mergers
where competition concerns are identified are cleared with remedies. For example, in the EU
in 2018, six out of 12 mergers investigated in Phase II were cleared with remedies. In addition, in
17 out of 383 mergers that were cleared in Phase I, clearance was subject to remedies to avoid an
in-depth Phase II investigation.
An effective remedy is one that fixes the competition concern caused by the transaction,
while at the same time preserving the commercial rationale of the deal. There are two main cat-
egories of risk that can undermine the ability of a remedy to achieve this goal: composition risk
and implementation risk. Composition risk refers to the possibility that the design of the rem-
edy fails to address the competitive harm identified, while implementation risk relates to the
possibility that the remedy might not work in practice, for example, because it takes too long to
become effective or the new competitor the remedy aimed to create ultimately exits the market.
In October 2005, the European Commission (EC) undertook a critical appraisal of the effec-
tiveness of remedies and identified a series of ‘serious design and implementation issues affect-
ing the effectiveness of remedies’.2 The EC identified composition risk in terms of the divest-
ment business being inadequate in scope as the most common issue. Since then, the EC has
developed a remedies policy designed to minimise both composition and implementation
risks. The US agencies’ approach to remedies as developed over the years is very similar to that
of the EC.
1 David Higbee, Djordje Petkoski and Geert Goeteyn are partners, Sara Ashall is counsel, Özlem Fidanboylu
is a senior associate, and John Skinner and Caroline Préel are associates, at Shearman & Sterling LLP.
2 Merger Remedies Study, dated October 2005 (The 2005 Remedies Study), p. 139, http://ec.europa.eu/
competition/mergers/legislation/remedies_study.pdf.
110
Crafting an effective remedy can be challenging and often depends on the competition
concerns that need to be addressed, as well as timing (i.e., whether the parties have the time
to fight the case on the merits or prefer to give a broader remedy early on in order to secure a
quick clearance).
This chapter focuses on designing an effective remedy and then identifies guideposts
for dealing with composition risk and implementation risk in the United States and the
European Union.
Designing an effective remedy

US
The US agencies’ view is that horizontal mergers will typically require a structural remedy to
resolve any anticompetitive concerns.3 This often takes the form of divestitures of existing
business entities or assets.4 Structural remedies can extend outside of traditional assets. For
example, in the case of data-intensive technology companies, the Department of Justice (DOJ)
treats data like any other asset class and, if data possession is critical to competition in the rel-
evant market, merging parties may be required to divest one side’s data collection if necessary
to maintain effective levels of competition.5
The US agencies can also employ non-structural conduct (or behavioural) remedies. These
often take the form of binding commitments designed to constrain the future conduct of the
merged firm. While behavioural relief may sometimes supplement a required divestiture to
fully achieve the remedial purpose, the US agencies generally consider behavioural remedies
to be far inferior because of the difficulty and costs associated with constructing, implement-
ing, monitoring and enforcing such remedies.6 Under the current administration, the DOJ and
Federal Trade Commission (FTC) have both stressed a strong preference for structural remedies
relative to behavioural remedies or a hybrid of the two types of remedies.7 For example, in the
T-Mobile/Sprint transaction, a horizontal merger between mobile telephone service providers,
3 For example, Dep’t of Justice, Antitrust Division Policy Guide to Merger Remedies (October 2004),
www.justice.gov/atr/page/file/1175136/download (DOJ Policy Guide); see also Fed Trade Comm’n, Bureau
of Competition, Negotiating Merger Remedies (January 2012), www.ftc.gov/system/files/attachments/
negotiating-merger-remedies/merger-remediesstmt.pdf (FTC Guidelines).
4 See, for example, DOJ Policy Guide, p. 12; FTC Guidelines, p. 6.
5 Brown, Aldrin, ‘US DoJ could require merging companies to divest critical data – Delrahim’, PaRR
(1 May 2019), https://app.parr-global.com/intelligence/view/prime-2829161.
6 See, for example, Dep’t of Justice, ‘Assistant Attorney General Makan Delrahim Delivers Keynote
Address at American Bar Association’s Antitrust Fall Forum’ (16 November 2017), www.justice.gov/opa/
speech/file/1012086/download, pp. 5–9 (Delrahim Remarks).
7 Id. See also Steves & Sons Inc v. JELD-WEN Inc, No. 3:16-CV-00545-REP, Statement of Interest
of the United States of America Regarding Equitable Relief (EDVa 2018), www.justice.gov/atr/
case-document/file/1069011/download; Fed Trade Comm’n, ‘Vertical Merger Enforcement at the FTC’,
Remarks of D Bruce Hoffman, Acting Dir, Bureau of Competition, Credit Suisse 2018 Washington
Perspectives Conference, Washington, DC (10 January 2018), www.ftc.gov/system/files/documents/
public_statements/1304213/hoffman_vertical_merger_speech_final.pdf (Hoffman Remarks)
(‘the FTC prefers structural remedies to structural problems’). See also Fed Trade Comm’n,
‘Prepared Remarks of Chairman Simons Announcing the Competition and Consumer Protection
Hearings’ (20 June 2018), www.ftc.gov/system/files/documents/public_statements/1385308/
prepared_remarks_of_joe_simons_announcing_the_hearings_6-20-18_0.pdf.
111

the DOJ required divestiture of Boost Mobile, Virgin Mobile and a number of Sprint’s prepaid
customers, as well as Sprint’s 800 MHz spectrum licences to the Dish Network. It also required
T-Mobile to assist Dish to take over any retail or cell towers T-Mobile decommissions and to
negotiate an agreement for T-Mobile to use Dish’s unused spectrum while it builds out its net-
work. Most unusually, however, the DOJ included Dish as a named defendant in the consent
decree, meaning that Dish could be held in contempt if it does not comply with its obligations to
use its mobile spectrum and build out a 5G broadband network.8
The US agencies’ preference for structural remedies can extend to vertical mergers as well,9
although behavioural remedies can often effectively address the anticompetitive issues raised
by vertical mergers. Indeed, Live Nation/Ticketmaster, Comcast/NBC Universal and Google/ITA
Software were all vertical mergers that the DOJ cleared, subject to behavioural commitments
designed to address competitive concerns.10 Similarly, the FTC applied behavioural remedies
to address concerns related to the vertical aspects in Staples/Essendant, where it required a
post-merger firewall between the merging parties to limit access to commercially sensitive
information pertaining to Essendant’s office supply customers that compete with Staples.11
However, the US agencies appear less willing to accept behavioural remedies unless there is
certainty that the anticompetitive conduct will be remedied.12
In November 2017, the DOJ filed suit against the AT&T/Time Warner transaction, a vertical
merger.13 In its complaint, the DOJ argued that were the merger to go through, AT&T would likely
raise prices for other pay-TV distributors that pay for rights to Time Warner movies and shows.14
8 United States v. Deutsche Telekom AG, No. 1:19-cv-022320TJK (30 July 2019) (Competitive Impact
Statement), https://www.justice.gov/opa/press-release/file/1189336/download.
9 Hoffman Remarks, pp. 7–8 (‘[I]t’s important to remember that the FTC prefers structural remedies to
structural problems, even with vertical mergers. . . . If we have a valid theory of harm, we start by looking
at structural remedies for most vertical mergers.’); see also Dep’t of Justice, ‘The Interesting Case of the
Vertical Merger’, Remarks of Jon Sallet, Deputy Assistant Attorney General of the Antitrust Div, Am Bar
Ass’n Fall Forum, Washington, DC (17 November 2016), www.justice.gov/opa/speech/deputy-assistant-
attorney-general-jon-sallet-antitrust-division-delivers-remarks-american (‘In vertical transactions,
observers sometimes assume that conduct remedies will always be available and sufficient. But that
is not the current practice of the division – if it ever was. . . . Some vertical transactions may present
sufficiently serious risks of foreclosing rivals’ access to critical inputs or customers, or otherwise
threaten competitive harm, that they require some form of structural relief or even require that the
transaction be blocked.’). But see Fed Trade Comm’n, ‘FTC Imposes Conditions on Northrop Grumman’s
Acquisition of Solid Rocket Motor Supplier Orbital ATK, Inc.’ (5 June 2018), www.ftc.gov/news-events/
press-releases/2018/06/ftc-imposes-conditions-northrop-grummans-acquisition-solid-rocket.
10 Behavioural remedies included anti-retaliation provisions protecting customers contracting with the
firms’ competitors, obligations to provide nondiscriminatory access to necessary inputs, requirements
to continue to develop upgrades and invest in specific products, the creation of informational firewalls
and various reporting requirements including reporting competitors’ complaints. See, generally,
William F Shughart II and Diana W Thomas, Antitrust Enforcement in the Obama Administration’s
First Term: A Regulatory Approach, CATO INST POL’Y ANALYSIS No. 739 (22 October 2013), at 14–17,
http://object.cato.org/sites/cato.org/files/pubs/pdf/pa739_web.pdf.
11 Fed Trade Comm’n, ‘FTC Imposes Conditions on Staples’ Acquisition of Office Supply Wholesaler
Essendant Inc.’ (28 January, 2019), https://www.ftc.gov/news-events/press-releases/2019/01/ftc-imposes-
conditions-staples-acquisition-office-supply.
12 See Delrahim Remarks pp7–9.
13 Complaint, United States v. AT&T, No. 17-cv-02511 (DDC 20 November 2017).
14 Id.
112

Although AT&T was reportedly willing to accept a behavioural consent decree with restrictions
similar to those the DOJ had previously accepted in Comcast/NBC Universal – analytically an
almost identical transaction – the DOJ nonetheless found the relief inadequate to ensure the
competitive landscape remained intact post-merger.15 In June 2018, following a six-week long
bench trial, the court rejected the DOJ’s challenge and ruled that the transaction did not vio-
late the antitrust laws.16 The DC Circuit affirmed the trial court after the DOJ appealed the
district court’s findings on the DOJ’s increased leverage theory, rejecting the DOJ’s argument
that the combined entity would have greater bargaining power in negotiating costs for Turner
Broadcasting System’s content.17 Notably, the appellate court referred to Turner Broadcasting’s
decision a week after the DOJ filed suit to send letters to approximately 1,000 distributors ‘irrevo-
cably offering’ to engage in ‘baseball style’ arbitration at any time in the next seven years should
there be pricing disputes. Further, Turner Broadcasting stated that it would give the distributor
the right to continue broadcasting content pending arbitration at existing terms.18 The court
noted that this ‘baseball style’ arbitration was part of the remedy in the Comcast/NBCU merger
and referenced the government’s statements in that merger regarding the efficacy of conduct
remedies.19 However, the court declined to articulate a new legal standard for the assessment of
vertical mergers, since neither party challenged the district court’s legal standards.20 It remains
to be seen whether the DOJ will become more willing to accept behavioural consent decrees
consistent with past practice.
Restoring competition is the ‘key to the whole question of an antitrust remedy’.21 Thus, the
US agencies will refuse to accept a divestiture buyer or proposed divestiture package where they
have determined that the proposed remedies are insufficient to replace the lost competition
or address competitive concerns. The US agencies have expressed a strong scepticism towards
the suitability of divestitures of less than a full business unit.22 For instance, in April 2016, the
DOJ filed a suit seeking to block Halliburton Company’s proposed acquisition of Baker Hughes
Inc.23 Before the lawsuit was filed, Halliburton had offered to divest up to US$7.5 billion in cer-
tain assets in an effort to address the department’s competitive concerns. According to the DOJ’s
complaint, the proposal was inadequate because it did not include full business units, withheld
15 AT&T/Time Warner offered to agree to enter into ‘baseball-style’ arbitration in any disputes with
pay-TV distributors specifically to address the government’s concerns. Ted Johnson, ‘Judge Will Allow
AT&T-Time Warner to Use Arbitration Offer in Defense of Merger,’ Variety (13 March 2018), http://variety.
com/2018/biz/news/att-time-warner-antitrust-trial-arbitration-offer-1202725268/.
16 United States v. AT&T Inc, 310 F.Supp.3d 161 (D.D.C. 2018).
17 United States v. AT&T Inc., 916 F.3d 1029 (D.C.Cir. 2019).
18 Id. at 1035.
19 Id.
20 Id. at 1037.
21 United States v. E I du Pont de Nemours & Co, 366 U.S. 316, 326 (1961). See also Ford Motor Co v. United
States, 405 US 562, 573 (1972) (‘The relief in an antitrust case must be “effective to redress the violations”
and “to restore competition”.’).
22 Nathan Wilson, the Deputy Assistant Director of the Bureau of Economics stressed the FTC’s focus on
divestment of full business units, stating in March 2019, ‘going forward, there will be great scrutiny of
divestiture short of an entire business’.
23 Complaint, United States v. Halliburton Corp, No. 16-cv-00233 (DDC 2016).
113

many critical assets, involved a number of ongoing entanglements between the merged com-
pany and the proposed divestiture buyer, and overall failed to replicate the existing (pre-merger)
competition.24
Similarly, the FTC found that the proposal by Staples Inc and Office Depot Inc to divest more
than US$1.25 billion in large corporate customer contracts to the wholesaler Essendant was
insufficient to remedy the significant competitive concerns caused by the transaction.25 The
FTC indicated that: (1) many of the contracts Staples proposed to transfer to Essendant were
short-term, allowing customers the option to return to Staples/Office Depot when the contracts
expired; (2) the proposed divestiture buyer did not currently serve any business-to-business
(B2B) customers; and (3) wholesalers like Essendant were historically unsuccessful competi-
tors for B2B business. Given these inadequacies, the FTC concluded that Essendant would be
unable to compete with the combined Staples/Office Depot on day one, thus rejecting the pro-
posed divestiture remedy.
While proposed merger settlements must be approved by a federal court under the Tunney
Act,26 this approval is almost always given without substantial inquiry or hearings. However,
in a highly unusual decision, Judge Leon in the DC District called for live testimony in court as
part of his approval of the remedies in the Aetna/CVS merger.27 In December 2018, Judge Leon
accepted conditions proposed by CVS to remain in place during his review, including that Aetna
would maintain its historical control over pricing for its insurance customers, and that CVS and
Aetna would not exchange competitively sensitive information, and allowed the deal to close.28
However, despite objections from CVS, Judge Leon heard live testimony on the merits of the
proposed settlement before ultimately approving the remedies. While this may remain an out-
lier in merger settlement review, the outcome of Judge Leon’s inquiry could set a precedent for
other judges to take similar action in the future.
EU
In the 2005 Remedies Study, the EC identified that in determining the business to be divested,
previous decisions had focused on the aim of removing the overlap between the merging parties
and placed too much weight on the structure of the market, measured in particular in terms of
24 Dep’t of Justice, ‘Halliburton and Baker Hughes Abandon Merger After Department of Justice Sued to
Block Deal’ (1 May 2016), www.justice.gov/opa/pr/halliburton-and-baker-hughes-abandon-merger-
after-department-justice-sued-block-deal.
25 In the complaint filed in December 2015, the FTC alleged that Staples’ acquisition of Office Depot would
significantly reduce competition nationwide in the market for consumable office supplies sold to large
business-to-business customers (B2B customers) for their own use. See Complaint, FTC v. Staples Inc,
No. 15-cv-02115 (DDC 2015).
26 15 USC Section 16 (1974).
27 Kendall, Brett, ‘Federal Judge to Hold Hearings on Decision to Allow CVS-Aetna Merger’, Wall Street
Journal (5 April 2019), https://www.wsj.com/articles/judge-to-allow-witness-testimony-on-cvs-aetna-
merger-11554494817?mg=prod/com-wsj.
28 Memorandum Order dated 21 December 2018, United States v. CVS Health Corp., No. 18-2340 (RJL),
available at: www.courtlistener.com/recap/gov.uscourts.dcd.200760/gov.uscourts.dcd.200760.44.0_2.pdf.
114

market shares rather than the ability of the divested business to restore effective competition.29
The EC has since made significant efforts to refocus this approach stressing that ‘the basic aim
of commitments is to ensure competitive market structures.’30
Designing a remedy therefore needs to entail ensuring that the remedy covers a suffi-
cient portion of the overlap and that the divestment will effectively operate in the market on
a long-term basis with limited need for continued intervention from the EC. These objectives
need to be addressed at the outset before the deal is cleared, resulting in sometimes difficult
negotiations between the EC and the merging parties.
The EC generally requires a complete divestiture of the overlap in order to ensure that the
divestment purchaser is a robust competitor that can effectively ‘step into the shoes’ of one of
the merging parties to replicate the pre-merger competitive constraint on the merged entity.
Divesting the entire overlap also ensures that the divestment purchaser can operate a viable
stand-alone business on a long-term basis which would not be possible if the merging parties
simply sold off some of the assets to enable them to get down to an ‘acceptable’ market share.
In addition, to ensure the long term viability of the remedy business, the EC will not only
focus on the products on the market contemporaneously but may also require steps to sure this
risk is managed in the future. For example, in Dow/DuPont, the parties offered remedies that
would ensure that the purchaser had the capabilities to preserve the viability and competitive-
ness of the divested products throughout their life cycles.31
Commitments that are structural in nature, such as selling a business unit, are strongly pre-
ferred; they provide a clear-cut, immediate and permanent way to restore effective competition.
In practice, however, there is a sliding scale between a clean-cut divestment remedy and behav-
ioural commitments, for example access to key infrastructure or inputs on non-discriminatory
terms. By way of example, in Hutchison/VimpelCom, the EC accepted a remedy which consisted
of a divestment of assets (RAN masts and spectrum licences) combined with a national roaming
agreement and a transitional network sharing agreement to facilitate the entry of a new mobile
network operator.32 In previous cases in this industry, the EC had accepted a commitment by
mobile network operators to grant wholesale access to mobile virtual network operators to
remedy its concerns (e.g., Telefónica Deutschland/E-Plus33 and Hutchison 3G UK/Telefónica
Ireland).34 However, difficulties in the implementation and enforcement of these remedies (see
for example the opening of non-compliance proceedings against the Telefónica in Telefónica
Deutschland/E-Plus) drove the move towards the more structural solution in Hutchison/
VimpelCom. Equally, where the imposition of a divestment remedy would be disproportionate
to the identified harm, the EC may be convinced to consider quasi-divestments. For example, in
Huntsman/Rockwood, the competition harm was limited to a product manufactured in a plant
29 Merger Remedies Study, dated October 2005 (The 2005 Remedies Study), p. 33, http://ec.europa.eu/
competition/mergers/legislation/remedies_study.pdf.
30 OECD Policy Roundtables, Remedies in Merger Cases, 2011, p. 235, www.oecd.org/daf/competition/
RemediesinMergerCases2011.pdf.
31 Commission Decision of 27 March 2017 in Case COMP/M.7932 Dow/DuPont.
32 Commission Decision of 1 September 2016 in Case COMP/M.7758 – Hutchison 3G Italy/Wind/JV.
33 Commission Decision of 2 July 2014 in Case COMP/M.7018 – Telefónica Deutschland/E-Plus.
34 Commission Decision of 28 May 2014 in Case COMP/M.6992 – Hutchison 3G UK/Telefónica Ireland.
115

that also made multiple other products for which no harm was identified. The EC therefore
accepted a tech-transfer remedy (i.e., divestment of know-how, production methodology and
brand) because it would have the same effect as a structural remedy.35
While behavioural remedies in horizontal mergers are extremely rare and limited to specific
cases or industries, the EC is generally more open to behavioural remedies in non-horizontal
cases. For example, in ASL/Arianespace, where ASL (a joint venture between Airbus and Safran)
acquired Arianespace, the EC was concerned that the transaction could give rise to Airbus and
Arianespace sharing competitively sensitive information in relation to satellite manufactures
and launch service providers. In particular, the EC was concerned that the flow of information
could result in: less competitive tenders because Airbus would be able to adjust its pricing pol-
icy to neutralise any competitive advantage its rivals may have; and less innovation, since rivals
would be discouraged from innovating because Airbus could easily copy their innovations. To
resolve this, the parties implemented firewalls between Airbus and Arianespace for 25 years to
restrict the flow of information that could harm competitors.36 Behavioural remedies are often
used in conglomerate mergers and require effective monitoring mechanisms because, in prin-
ciple, the parties retain the ability to negatively affect competition, but are simply committing
not to make use of that ability. By way of example, in Broadcom/Brocade, the EC required a rem-
edy to ensure that the merged entity continued to ensure interoperability with competing HBA
card suppliers to assuage its conglomerate concerns in these markets.
As part of the design of the remedy, the EC will try to ensure that the divestment business
is up and running as soon as possible. This is partially dealt with by imposing strict deadlines
on the process, as discussed below, but is also managed through the transitional agreements
between the merged entity and the divestment business. On the one hand, such transitional
agreements are needed to ensure that the divestment business has continued access to vital
inputs, but on the other hand, the EC will seek to minimise any reliance on the merged entity
post-transaction. In general, the EC is willing to accept transition agreements for approximately
three years.37 Anything that goes beyond this duration risks that the divestment business is not
capable of operating as an effective competitor on a stand-alone basis.
35 Competition merger brief Issue 1/2015, 3 March 2015, http://ec.europa.eu/competition/publications/

cmb/2015/cmb2015_001_en.pdf. See also Commission Decision of 10 March 2016 in Case
COMP/M.7746 Teva/Allergan where the behavioural remedy was also accepted because it would
eventually lead to a structural change in the market.
36 Commission Decision of 20 July 2016 in Case COMP/M.7724 ASL/Arianespace. See also Commission
Decision of 10 March 2016 in Case COMP/M.7746 Teva/Allergan, where a structural remedy was offered
to deal with the vertical relationships in outlicensing involving either the upstream market (the
divestment of the dossier and corresponding licensing rights across the EEA) or the downstream
market (the divestments of rights and assets to manufacture and sell the molecule in the affected
country), and Commission Decision of 26 January 2011 in Case COMP/M.5984 Intel/McAfee where
behavioural remedies and access remedies were considered acceptable because the straight-forward
obligations could be easily monitored by the monitoring trustee.
37 Commission Decision of 9 November 2016 in Case COMP/M.7917 Boehringer Ingelheim/Sanofi Animal
Health Business and Commission Decision of 8 August 2016 in Case COMP/M.7792 Konecranes/Terex.
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If the divestment business is not a standalone entity, a carve-out is required to separate out
the divestment business from the business remaining with the merged entity. While it depends
on the proportion of the business being carved out compared to that remaining with the merged
entity, the EC has a preference for reverse carve-outs so that the risks and disruption to the busi-
ness of such a carve-out are borne by the merged entity rather than the divestment business.38
As noted above, the main way the EC addresses composition risk is to include the entire
overlap to maintain the status quo on the market. To address implementation risk, the EC may,
however, go further, requiring businesses in markets where competition concerns have not
been identified to also be included if this is seen as necessary for the overall long-term viability
and effectiveness of the remedy business. For example, in Ineos/Solvay/JV, the EC’s competitive
assessment focused on S-PVC, but the remedy required that in addition to removing the overlap
between the parties, the divested plants had to enjoy full vertical integration of upstream chlo-
rine and ethylenedichloride. Therefore, the divestment package included production assets in
Tessenderlo and Runcorn so that the divestment purchaser had a fully integrated self-standing
S-PVC business.39
Similarly, in relation to inputs, the merged entity may need to assign contracts for critical
inputs to be available to the divestment purchaser even if concerns were not identified in that
market.40 For example, in Solvay/Cytec, the commitments gave the purchaser the possibility to
acquire other products that were manufactured in the same unit to allow for the divested busi-
ness to be operated in an effective manner.41
Implementing an effective remedy

Once the remedy has been designed, parties need to ensure that the purchaser is considered
suitable, the divestment agreement replicates the agreed remedies and that the divestment
business can operate on a stand-alone basis with minimal monitoring. These factors are key
when dealing with implementation risk.
Acceptable purchasers
The viability of the remedy depends on the suitability of the purchaser, and therefore agen-
cies will pay particular attention to the profile of the purchaser. The US and the EU are largely
aligned in their approach in this regard. In both the US and the EU, the relevant agency must in
38 For example, Commission Decision of 8 September 2015 in Case COMP/M.7278 General Electric/Alstom
(Thermal Power – Renewable Power & Grid Business) (GE/Alstom).
39 Commission Decision of 8 May 2014 in Case COMP/M.6905 Ineos/Solvay/JV.
40 Commission Decision of 16 May 2012 in Case COMP/M.6286 Südzucker/EDFM, where the EC accepted
the assignment of a long-term supply contract for raw sugar to the purchaser of a brand-new refinery in
order to ensure sufficient input of raw sugar for the divested refinery. Similarly, in Commission Decision
of 10 September 2014 in Case COMP/M.7061 Huntsman Corporation/Equity Interests held by Rockwood
Holdings, the purchaser would be able to purchase upstream inputs on the basis of a transitional
supply agreement.
41 Commission Notice on remedies acceptable under Council Regulation (EC) No. 139/2004 and
under Commission Regulation (EC) No. 802/2004, para. 23, https://eur-lex.europa.eu/legal-content/
EN/ALL/?uri=CELEX:52008XC1022(01); and Commission Decision of 2 December 2015 in Case
COMP/M.7777 Solvay/Cytec.
117

all cases give prior approval to the divestiture buyer. The US agencies will scrutinise the finan-
cial and competitive viability of the prospective purchaser and will insist that the purchaser
have both the ability and the intention to compete effectively in the relevant market.
Similarly, in the EU, the template text of the commitments requires that the purchaser
meet three criteria: be independent of the merging parties; have the financial resources and
proven relevant expertise to run the business long-term; and not present prima facie com-
petition concerns in its acquisition of the divestment business.42 The EC has a strong prefer-
ence for trade buyers in the same or related markets. This approach aims to ensure that the
purchaser’s activities can be scaled up as quickly as possible to replicate the competitive force
of the parties pre-merger. Consequently, private equity buyers are often considered not to be
suitable purchasers and are excluded from the process by the inclusion of additional clauses
in the text that mandate the type of experience that the purchaser must have. For example, in
Boehringer Ingelheim/Sanofi Animal Health Business, the EC required that the purchaser had
manufacturing capabilities, experience and expertise to successfully implement the technol-
ogy transfer of antigens and finished products.43
Most importantly, the divestiture buyer must be able to replicate and replace the compe-
tition lost through the transaction. In the US and the EU, the purchaser will have to provide
detailed financial documentation and demonstrate that it has the necessary financial resources
to fund the acquisition (explaining all sources of funding), satisfy any immediate capital needs,
and operate the divested assets on a going-forward basis (including any contingency plans if
financial projections are not met). The purchaser will also have to prepare and present a busi-
ness plan to the relevant agency to establish that the purchaser has adequate experience, incen-
tives and commitment to compete. Parties should bear all these criteria in mind when selecting
a prospective purchaser because they ultimately have the burden of convincing the authorities
that the purchaser is suitable.44
In the US, the need for a buyer with strong financial resources is particularly important
given recent divestitures that have resulted in failures after the buyer declared bankruptcy. For
instance, in Hertz Global Holding Inc/Dollar Thrifty Automotive Group Inc, the divestiture buyer
declared bankruptcy and the FTC had no choice but to allow Hertz to buy back some of the auto
rental locations it had divested so that these locations could continue to operate.45 The FTC was
faced with a similar outcome in Albertsons LLC’s acquisition of Safeway Inc, where Haggen
42 Model text for divestiture commitments, available at http://ec.europa.eu/competition/mergers/

legislation/template_commitments_en.pdf.
Health Business.
44 For example, DOJ Policy Guide, pp. 30–33; FTC Guidelines, pp. 10–11. Note that the FTC has
recently announced that it intends to give even greater scrutiny on a going-forward basis to buyer
financing and any funding limitations that could hamper the buyer. See also Fed Trade Comm’n,
‘Looking back (again) at FTC merger remedies’ (3 February 2017), www.ftc.gov/news-events/blogs/
competition-matters/2017/02/looking-back-again-ftc-merger-remedies.
45 Fed Trade Comm’n, ‘FTC Seeks Public Comment on Franchise Services of North America’s Application
to Sell Assets Related to Simply Wheelz to Hertz and Avis Budget Group’ (17 April 2014), www.ftc.gov/
news-events/press-releases/2014/04/ftc-seeks-public-comment-franchise-services-north-americas.
118

Holdings LLC, the divestiture buyer of the grocery stores, also declared bankruptcy. Albertsons
was allowed to reacquire the divested stores and the consent decree was modified to permit
Albertsons to rehire employees.46
Statements from FTC Commissioners have expressed conflicting viewpoints on the poten-
tial suitability of private equity buyers. Commissioner Chopra has conveyed scepticism about
the ability of private equity buyers to replicate the divestment business’s competitive influence
owing to a lack of long-term incentives and resources inherent in the private equity business
model.47 Following his comments, Commissioner Chopra was the sole dissenter in the FTC’s
acceptance of divestitures in the Linde/Praxair merger, based on the presence of a private equity
firm as a partner in the purchaser joint-venture.48 On the other hand, Commissioner Simons
expressed his belief that private equity buyers have management experience and strong finan-
cial backing that can support the divestment business and encouraged a case-by-case review of
potential buyers.49 It remains to be seen whether Commissioner Chopra’s views will have a last-
ing effect on buyer approval but, going forward, private equity purchasers may face increased
scrutiny of their long-term commitment to the viability of a divestment business.
Both the US and EU agencies are unlikely to permit divestitures involving seller financ-
ing apart from in exceptional circumstances. For example, the US agencies may approve stag-
gered payments to the seller, provided such payments are not tied to any performance-based
benchmarks. The EC also sets out that it will not provide any seller financing if this were to give
the seller a share in the future profits of the divested business.50 The US agencies will also not
accept a divestiture to a buyer that intends to redeploy the assets elsewhere. That said, while
the prospective purchaser must have the ability and intent to compete in the relevant market
for the foreseeable future, the US agencies will not insist that the buyer maintain the divested
assets – or continue to employ them in the market – indefinitely.51
In the US and the EU, the divestiture buyer cannot be approved if the divestment would
create competitive concerns. Thus, the buyer should not already be a significant participant or
poised entrant in the relevant market pre-divestiture. It is notable in this regard that the former
Director of the FTC’s Bureau of Competition recently acknowledged that consolidation in some
46 Fed Trade Comm’n, ‘FTC Approves Application for Modification of Divestiture Agreement
Between Albertsons and Haggen Holdings, LLC’ (25 September 2015), www.ftc.gov/news-events/
press-releases/2015/09/ftc-approves-application-modification-divestiture-agreement.
47 ‘FTC Commissioner hits out at private equity’, Global Competition Review, Sept. 25, 2018, https://
globalcompetitionreview.com/article/usa/1174735/ftc-commissioner-hits-out-at-privateequity.
48 In the Matter of Linde AG, Commission File No. 1710068, Statement of Commissioner Rohit
Chopra (22 October 2018), available at https://www.ftc.gov/system/files/documents/public_
statements-/1416947/17100 68_praxair_linde_rc_statement.pdf.
49 ‘Simons defends divestitures to private equity’, Global Competition Review, 16 November 2018, https://
globalcompetitionreview.com/article/usa/1176982/simons-defends-divestitures-to-private-equity.
50 Commission Notice on remedies acceptable under Council Regulation (EC) No. 139/2004 and under
Commission Regulation (EC) No. 802/2004, para 103, http://ec.europa.eu/competition/mergers/
legislation/draft_remedies_notice.pdf.
51 For example, DOJ Policy Guide, pp. 34; FTC Guidelines at pp. 10–11.
119

industries has made it more challenging to find qualified buyers for divestiture assets.52 In the
EU, this requirement is generally understood to mean that the divestment acquisition must not
result in the buyer obtaining a combined market share of more than 25 per cent.
In 2016, the EC started publishing its formal purchaser approval decisions, although it
made no formal announcement of this change. While we expect the number of purchaser rejec-
tions to be rare, the approval decisions will theoretically create greater transparency in the
EC’s appraisal process and may help future merging parties in the same relevant markets put
together effective remedies where required. However, in reality, since such purchaser approval
decisions evaluate the purchaser’s financial viability, expertise and strategy, the content of most
of these decisions are heavily redacted.
How to ensure expeditious and successful divestiture

US
The US antitrust enforcement agencies have a strong preference for an ‘upfront’ divestiture
buyer, meaning that the parties must identify an acceptable buyer, and finalise and execute the
purchase agreement with that buyer, before a consent order is issued. The US agencies are par-
ticularly likely to require the merging parties to identify an upfront buyer if the parties propose
to divest less than a stand-alone business or a ‘mix-and-match’ package of assets.53 An upfront
buyer ensures that the divestiture package results in a purchaser that will preserve competition
in the market, and it reduces the risk that the remedy will be ineffective or that harm to com-
petition will occur in the interim period between the closing of the primary transaction and
the implementation of the remedy. While there are instances where an up-front buyer is not
required, this is generally the exception rather than the rule.54 Indeed, the DOJ has demanded
an upfront buyer in more than half of its merger challenges in the past several years.55
Notably, the FTC’s recent study on merger remedies found that all prior remedies involving
divestitures of stand-alone businesses succeeded in maintaining or restoring competition, but
that divestiture packages comprising less than an ongoing business sometimes did not always
succeed in remedying the competition lost as a result of the merger – even where there was an
upfront buyer. The FTC thus announced that:
52 Curtis Eichelberger, ‘Comment: Foreign conglomerates among potential acquirers of divested assets of
merging agriculture giants’, MLex (14 June 2016), (citing comments by former Bureau of Competition
Director Debbie Feinstein) www.mlex.com/GlobalAntitrust/DetailView.aspx?cid=803441&siteid=191&r
dir=1.
53 For example, DOJ Policy Guide, pp. 12–13; FTC Guidelines, p. 7.
54 The FTC has indicated that when the parties have shown that an acceptable ‘buyer will emerge, that
the asset package is an ongoing, stand-alone business and will maintain or restore competition in
the market at issue, and that interim competition and the viability of the assets will be preserved
pending divestiture, post-order divestitures have been accepted’. Fed Trade Comm’n, Frequently Asked
Questions About Merger Consent Order Provisions, www.ftc.gov/tips-advice/competition-guidance/
guide-antitrust-laws/mergers/merger-faq.
55 Flavia Fortes, ‘DOJ requires upfront buyer in more than half of divestiture cases, senior official says’,
MLex (13 April 2018), www.mlex.com/GlobalAntitrust/DetailView.aspx?cid=981452&siteid=191&rdir=1.
120

Going forward, respondents and buyers can expect that proposals to divest
selected assets, even when the proposal includes an upfront buyer, will undergo
more detailed scrutiny to reduce further the risk that the buyer won’t get what it
needs to be an effective competitor.56
Where there is an upfront buyer, merging parties will execute the transaction (divestiture)
agreement with the proposed purchaser before entering into a final consent decree with the
FTC or the DOJ. By contrast, where there is a ‘post-order buyer’, the buyer is identified, and the
divestiture agreement executed, only after a final consent decree has been issued.
In either case, whether the purchaser is upfront or post-order, the US agencies will carefully
review the commercial agreements giving effect to the divestiture to ensure that they conform
to the consent decree and its remedial objectives. The transaction documents should provide
for the effective transfer of all necessary assets and detail any additional obligations, such as
transitional services. The US agencies will not participate in negotiations between the merging
parties and the divestiture buyer, but they will provide comments and guidance relating to com-
mercial agreement provisions.57
The US agencies are generally not concerned with the purchase price for the acquisition of
the divested assets and there is no minimum purchase price.58
EU
The standard course of action is for the EC to adopt a conditional clearance decision once an
appropriate remedy package has been agreed, following which the parties are free to close the
principal transaction. However, the EC will set a deadline by which a binding agreement must
have been entered into for the sale of the divestment business. Although kept confidential in
the commitments, this first divestment period is typically six months, which limits the time
that the divestment business is exposed to the commercial uncertainty and disruption of being
transferred to a new owner. In exceptional circumstances, this initial divestment period can
be extended, although this rarely happens in practice. If the divestment has not taken place
within the mandated period, a divestiture trustee is appointed to sell the business on behalf of
the merging parties within a three-month period (normally the monitoring trustee or an invest-
ment bank appointed by the monitoring trustee).
If in its assessment of the commitments, the EC considers that implementation risk will
arise from the fact that the remedy is particularly complex, there is only muted interest in the
market or there is a limited pool of potential purchasers likely to be considered suitable, it may
require the inclusion of an upfront buyer clause in the remedy package. In this case, the merg-
ing parties are prevented from closing their principal transaction until a binding agreement has
been entered into with a suitable purchaser. The use of such upfront clauses has been increas-
ing significantly in recent years, and since 2016 there have been 11 examples of such clauses
being used (with six relating to Phase I cases and five to Phase II cases).
56 Fed Trade Comm’n, ‘Looking back (again) at FTC merger remedies’ (3 February 2017), www.ftc.gov/
news-events/blogs/competition-matters/2017/02/looking-back-again-ftc-merger-remedies.
57 For example, FTC Guidelines, pp. 7–8, 12, 18.
58 For example DOJ Policy Guide, pp. 34; FTC Guidelines, p. 11.
121

In addition to the inclusion of upfront buyer provisions in the remedies, fix-it-first solu-
tions have been also used to deal with implementation risk concerns. While the two terms are
often used interchangeably, a fix-it-first solution is procedurally quite different from a situa-
tion where an upfront buyer clause has been required. Fix-it-first solutions involve the parties
coming to the EC during the substantive review with a proposed remedy package and poten-
tial buyer and this is included in the substantive review of the transaction. In this case, the EC
can be assured that the remedy will be implemented before the principal transaction has been
closed and it benefits the parties by allowing the negotiations to take place with more limited
involvement from the EC and third parties. Giving the significant timing pressures, however,
and the continued risk that the EC still needs to bless the solution, they have been less common.
The EC has shown a willingness to be pragmatic when it comes to fix-it-first solutions. For
example, in GE/Alstom, GE proposed Ansaldo as the potential purchaser for its heavy-duty gas
turbines business as a fix-it-first solution, but this was subject to the subsequent approval by
the EC of the buyer and the SPA agreements, which occurred in a separate purchaser approval
decision around six weeks after the clearance decision of the principal transaction.59 The EC
has also taken a flexible approach by allowing the parties’ planned fix-it-first remedy to evolve
into an upfront buyer scenario or allowing a fix-it-first to be combined with other remedy pack-
ages to secure Phase I clearance. For example, in AB InBev/SabMiller, the parties identified a
fix-it-first solution early on, but later in the review additional competition concerns were identi-
fied. The EC allowed a dual remedy involving a fix-it-first solution and another remedy package
to deal with the other competition concerns to secure a Phase I clearance.60 While parties can
have a ‘pure’ fix-it-first solution in Phase I, this is rare.61 From a commercial point of view, par-
ties would have to be willing to provide a broader remedy and identify a purchaser in (or even
before) pre-notification discussions with the EC.
As a last resort to obtain clearance, the parties may also be willing to offer a ‘crown jewels’
package, in which parties commit to divest a more attractive business if they have not divested
the originally proposed business by the end of the period fixed in the commitments. Such pack-
ages have not been used by the EC in recent years, the EC having been more aggressive in requir-
ing attractive divestment packages in the first instance.
The EC, like the US, also carries out a detailed analysis of the commercial agreements to
ensure that the remedy is effective and that the divestiture has a lasting impact on the market.
In the case of an upfront buyer or fix-it-first solution, the parties should be prepared for the EC
to take a hands-on approach to ‘check in’ on the progress of negotiations with the purchaser and
59 Competition merger brief issue 1/2016, 21 March 2016, http://ec.europa.eu/competition/publications/

cmb/2016/cmb2016_001_en.pdf. Commission Decision of 8 September 2015 in Case COMP/M.7278
General Electric/Alstom (Thermal Power – Renewable Power & Grid Business) (GE/Alstom). The
clearance decision of the principal transaction was on 8 September 2015 and the purchaser approval
was on 22 October 2015.
60 Competition merger brief issue 4/2016, 12 December 2016, http://ec.europa.eu/competition/
publications/cmb/2016/kdal16004enn.pdf. See also Commission Decision of 15 December 2014 in Case
COMP/M.7252 Holcim/Lafarge which involved a hybrid FIFfix-it-first and other remedies package.
Health Business.
122

the divestiture agreement. This becomes less relevant in the case of normal remedies where
clearance has occurred and the monitoring trustee will step in to ensure that the remedy is cor-
rectly implemented.
Monitoring
US
In cases where the remedy imposes an obligation that requires a continuing ongoing relation-
ship between the parties and the divestiture buyer, the US agencies often appoint an independ-
ent third party to monitor the parties’ compliance with the consent order obligations.62 The
FTC’s Compliance Division, among other tasks, monitors consent decrees, including evaluating
requests to reopen, modify, or set aside orders and seek penalties for order violations. Recently,
the DOJ announced that it has created a similar office solely dedicated to ensuring compliance
and enforcement of the Antitrust Division’s consent decrees.63
EU
In the EU, the parties must preserve the divestment business by ring-fencing it and not carrying
out any acts that might have significant negative impacts on its value, management or competi-
tiveness. Parties may also have to continue to finance the divested business to allow its ongoing
development on the basis of the existing business plans and to retain key personnel by offering
incentive schemes.
The supervision process is carried out by the monitoring trustee, which acts as the ‘eyes
and ears’ of the EC in order to hold separate the divestment business, oversee carveouts, verify
the sale process and review the proposed purchasers. The monitoring trustee is also obliged to
report to the EC at regular intervals and can intervene in matters at the EC’s request.
Conclusion
While there are differences in the merger procedure in the EU and the US, there is a clear conver-
gence in their approaches. Over time, authorities in both jurisdictions have increasingly taken
an aggressive and hands-on approach to ensuring that remedies address composition and in
particular implementation risk. They have worked to craft remedies that are broad enough
to effectively address the competition concerns and are implemented in a way that creates a
meaningful and lasting change in the market. The authorities have also shown willingness to
take flexible approaches to merger remedies. For example, the EC has been willing to consider
blended remedy packages to address different competition concerns in a proportionate way
and is willing to allow fix-it-first solutions that are not workable to evolve into upfront buyer
solutions to ensure that there is an effective remedy. From experience, merging parties are also
becoming more pragmatic and engage in remedy discussions with the authorities from the out-
set. For example, at the EC level, parties are routinely engaging in a longer pre-notification dis-
cussion as a means of paving the way for a Phase I clearance with remedies.
62 FTC Guidelines.
63 Dep’t of Justice, ‘Remarks of Assistant Attorney General Makan Delrahim at Competition and
Deregulation Roundtable #2’ (26 April 2018), www.justice.gov/opa/speech/file/1057841/download, p. 6.
123

One factor that has increased significantly since the EC remedy study is the international
cooperation between the EC, US and competition authorities in other jurisdictions such as
Brazil, China and Korea. In a speech in 2016, Competition Commissioner Vestager stated that
the EC cooperates with agencies outside of the EU in approximately 60 per cent of complex
merger investigations,64 and in a 2018 speech made reference to the high level of trust and coop-
eration between the EC and US authorities in particular in merger cases.65 In cases where the
competition concerns in the two jurisdictions were different, such as GE/Alstom, the EU and
the US collaborated on overlapping, non-conflicting divestiture packages across the Atlantic to
the same purchaser. Even in cases where the same outcome has not been reached, the authori-
ties have been keen to stress that international cooperation in mergers (and therefore merger
remedies) remains key. This can be seen in Commissioner Vestager’s comments when the EU
approved the Staples/Office Depot merger, which had been blocked by the FTC. This difference
in approach was not a result of a lack of coordination, but rather, ‘[i]t only reminds us that how-
ever closely we coordinate, there will always be times when we come to different answers sim-
ply because the markets – or the remedies the companies offer to address our concerns – are
different.’66 Therefore, parties should take a global approach in order to design and implement
effective remedies across the various jurisdictions in which they file. Indeed, in practice, the
‘younger’ authorities often wait for the EU and US processes to conclude in order to mirror the
remedies imposed and give effect to the remedy in a consistent manner.
64 CPI Talks: Interview with Commissioner Margrethe Vestager, Commissioner for Competition of the
European Union (Competition Policy International, April 2016), www.competitionpolicyinternational.
com/wp-content/uploads/2016/04/Interview-with-Margrethe-Vestager-Supplement.pdf. See also Case
Comp/ M.7585 NXP Semiconductors/Freescale Semiconductor.
65 The importance of being open – and fair, European Conference, Harvard University, 2 March 2018,
https://ec.europa.eu/commission/commissioners/2014-2019/vestager/announcements/importance-
being-open-and-fair_en.
66 Working together to support fair competition worldwide, UCL Jevons Institute Conference,
3 June 2016, https://ec.europa.eu/commission/commissioners/2014-2019/vestager/announcements/
working-together-support-fair-competition-worldwide_en.
124

PART IV
COMPLIANCE

11
A Practical Perspective on Monitoring
Justin Menezes1
When an investigation by a competition authority leads to the conclusion that a proposed

transaction may potentially have an adverse impact on competition within a specific market,
the authority may require the parties to the transaction to offer remedies in the form of under-
takings or commitments to ensure that the effectiveness of competition post-transaction be
maintained or restored.
Increasingly, the competition authorities deem it necessary to appoint an independent
monitoring trustee to ensure the smooth implementation of and compliance with a specific
remedies package. Trustee appointments are considered crucial to the success of a remedy and
reduce the risk of non-compliance. The role of the trustee is to supervise the compliance of the
parties with their commitments, and report to, and be available to receive instructions from, the
competition authority.
The objectives of the competition authority and of the merging parties should be at the
forefront of the trustee’s approach to monitoring the implementation of commitments. The
trustee needs to be mindful of the requirements of the commitments and the expectations of
competition authorities, and identify and highlight any potential pitfalls with the approach to
the implementation of the commitments given by merging parties in each specific case, based
upon the trustee’s knowledge and experience of previous cases.
In this chapter we focus on divestiture commitments. In these cases, the merging parties
(the seller) are required to divest a business (the divestment business) to remove competition
concerns identified by the competition authority to obtain a conditional clearance decision.
Based upon the standard European Commission (EC) Commitments template, during this pro-
cess the seller is obliged to:
• conduct a sales process during the first divestiture period, usually up to six months;
• find a suitable purchaser for the divestment business;
1 Justin Menezes is a partner at Mazars. The author would like to thank the monitoring trustee team at
Mazars for their assistance in researching and preparing this chapter.
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• agree the terms of sale that are in accordance with the commitments; and
• ensure that the divestment business is held separate, ring-fenced and maintained as a mar-
ketable, competitive and viable business until the closing of the onsale.
This chapter provides an overview of the implementation of divestiture commitments, the

challenges the seller must overcome to comply with the commitments, and practical tips for
sellers to assist with confirming their compliance with their commitments.
We make reference to the best practice guidelines published by the EC and the standard EC
commitments template. The general requirements of other competition authorities for divesti-
ture commitments are broadly similar to those of the EC. Our experience of multi-jurisdictional
mergers involving multiple competition authorities in parallel is that competition authorities
around the world are increasingly working closely together in the context of maintaining the
regulatory oversight of global transactions.
Sales process
The standard EC commitments template defines two distinct divestiture periods. During the
first divestiture period, the sales process is in the hands of the seller, supervised by a monitor-
ing trustee, whereas in the second divestiture period, the sales process is under the control of
a divestiture trustee. In its best practice guidelines, the EC states that it normally considers as
appropriate a period of six months for the first divestiture period and three to six months for the
second period.2
The proposed purchaser of the divestment business must meet the purchaser criteria as
defined in the commitments. The purchaser must be independent of the seller and have suf-
ficient financial resources, expertise and incentives to maintain and develop the divestment
business as a viable and active competitive force in the market. Additional purchaser criteria
may be defined by the competition authority in specific cases.
During the due diligence phase, the seller is committed to providing sufficient information
to potential purchasers about the divestment business and personnel, as well as granting rea-
sonable access to the personnel.
Challenges during the sales process

The situation to avoid is one where potential purchasers show limited interest in the divest-
ment business. In most cases where this happens this is because of low or even negative fore-
casted performance of the divestment business or changes in the environment (e.g., technology
or regulation). If interest from potential purchasers is limited, the seller may be in a weak posi-
tion during negotiations and face an increased risk of being unable to find a suitable purchaser
during the first divestiture period.
Another challenge arises where the divestment business is highly integrated into the seller’s
business and it is difficult for the seller to provide financial information that relates specifically
to the divestment business. Sales figures may be available, whereas corresponding costs of the
running of the business are not or the current running costs are not relevant for the potential
2 Best Practice Guidelines: The Commission’s Model Texts for Divestiture Commitments and the Trustee
Mandate under the EC Merger Regulation 5 December 2013 at paragraph 15.
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purchaser. This may make any assessment by interested parties difficult and may impact upon
the due diligence phase, quality of offers and contract negotiations. Potential purchasers may
make late or non-binding offers when timely binding offers were required. They may, as a con-
sequence, offer a lower purchase price or request more guarantees to compensate for the lack
of data. The parties may also find they are required to negotiate more transitional service agree-
ments, as a result of the lack of information provided.
As is typical in M&A transactions, the seller faces the risk of losing momentum during the
sales process if the right number of bidders cannot be found or where the sales process (e.g.,
timetable, question-and-answer process, information to be provided) has not been adequately
defined. This requires a balancing act. If too many bidders are found, the seller may struggle to
provide timely responses to questions, causing a delay in the sale. However, if sufficient bidders
are not found, the seller may lose the competitive pressure of having more bidders involved
and may lose its negotiating strength, which can also lead to delays and less attractive offers.
In theory it should be confidential which bidders are in the sales process, but the practice has
shown that this is sometimes not the case. In some cases bidders are well aware of other bidders
in the process and adapt their offers depending on other bidders in the sales process.
Beyond the purchaser criteria defined in the commitments, the competition authority may
have a clear preference for a certain type of buyer (e.g., a strategic investor that already offers
comparable products to those of the divestment business, but in other geographical regions).
The competition authority may have clear objections to certain parties (e.g., because of compe-
tition concerns or lack of independence from the seller). If the seller does not take into account
these preferences, the proposed purchaser may not be approved or the process can be seri-
ously delayed.
The definition of the scope of the divestment business is key to a successful sales process.
When the divestment business is defined in the commitments, the seller should consider:
• who is interested in buying the business;
• why the divestment business is attractive for interested parties; and
• how easily the divestment business can be carved out from the business to be retained.
If possible, assuming alignment with regulators on the scope of the package, the seller should
try to initiate the divestiture process before the date of the approval decision of the competi-
tion authority. This provides maximum time to conduct a structured process that can optimise
the competitive pressure during the sales process and test the attractiveness of the divestment
business in the market. Especially if the divestment business is highly integrated, the seller
should start to collect data as soon as possible, prepare pro forma financial information etc. as
this can be time consuming and reduce the actual time for the divestiture process.
The seller should carefully plan the sales process before it begins and include some margin
in the timetable to ensure that binding agreements are signed for the divestment during the
first divestiture period. The preparation of vendor due diligence reports and reasonably com-
plete data rooms can significantly reduce the time required for due diligence.
In our experience, close communication with the trustee and the competition authority
is important. This allows the seller to exclude interested parties early in the sales process if
it becomes clear that purchaser approval for certain candidates may not be likely to be forth
coming. The competition authority may raise concerns regarding the suitability of certain bid-
ders. These concerns can be investigated by the seller to check whether they can be mitigated.
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An interested party, for example, may lack relevant experience and proven expertise. This issue
may be mitigated by the hiring of executives or managers who have significant experience in
the relevant sector.
Terms of sale
The standard EC commitments template imposes on the seller an obligation to procure the
divestment of the divestment business as a going concern to a purchaser on terms of sale
approved by the EC in accordance with the procedure prescribed in the commitments. Other
competition authorities have similar rules.
Once a purchaser has been found and a deal has been struck, the sellers are required to
submit a fully documented ‘reasoned proposal’, which includes copies of the final signed bind-
ing sale and purchase agreement, together with any ancillary agreements to the competition
authority that verifies whether the divestiture as provided for within the agreements is in line
with the commitments.3 The competition authorities take the review of transaction documents
and confirmation that they are in line with the commitments very seriously, scrutinising the
agreements, schedules and exhibits thoroughly.
In its assessment of the suitability of the proposed purchaser, the competition authorities
have occasionally informed the parties that the terms of the sale have not been concluded in
line with the commitments, and requested certain changes to the agreements for the purchaser
and the agreements affecting the sale and transfer of the business to be approved.
The role of the trustee is to submit to the competition authority a reasoned opinion as to
whether the proposed purchaser fulfils the purchaser requirements in the commitments and
whether the business is sold in a manner consistent with the commitments.4 The trustee’s
assessment provides helpful guidance and assistance in the course of the competition author-
ity’s review and is an important element that the competition authority will consider, but it is
not a substitute for the competition authority’s own assessment.5
Consistency with commitments

The importance of ensuring at an early stage of the process that the transaction agreements are
consistent with the commitments should not be understated. The parties should endeavour
to avoid a situation in which the competition authority reaches the assessment that the agree-
ments do not implement the sale as foreseen in the commitments. This will delay the closing of
the transaction while amendments to the agreements or side letters are negotiated to bring the
agreements into line with the commitments.
For companies to avoid having to negotiate last-minute amendments to the transaction
agreements to demonstrate that the agreements are executed in a manner consistent with the
commitments, we have some practical tips to ensure early detection of potential compliance
issues and resolution at an early stage:
3 Commission Notice on remedies acceptable under Council Regulation (EC) No. 139/2004 and under
Commission Regulation (EC) No. 802/2004 2008 at paragraph 105.
5 European Commission (C-553/10 P) and Lagardère SCA (C-554/10 P) v. Éditions Odile Jacob SAS at
paragraphs 26 and 31–35.
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• The seller should share drafts of the agreements with the trustee. It is advisable to share
drafts of the sale and purchase agreement and all ancillary agreements with fully com-
pleted schedules and annexes at the earliest possible point in the sales process. It is pru-
dent to involve employees (e.g., the hold-separate manager)6 who understand the scope
of the divestment business that is being sold in detail to review the completeness of the
draft agreements, schedules and exhibits. The seller should obtain comments on con-
sistency from the trustee as early as possible and discuss the implementation of those
changes promptly.
• If issues are identified during the review by the trustee or competition authority, the seller
should discuss how to allay any concerns and potential methods of resolution as soon
as possible.
• The seller should have the final amended agreements ready for final review by the trustee
before submitting the reasoned proposal so these final agreements can form the basis of the
trustee’s reasoned opinion.
• Finally, where changes to the agreements are difficult because of the late stage of the pro-
cess, the seller may provide a letter of confirmation to the competition authority stating
that the agreement is executed in a manner that is consistent with the commitments.
Hold-separate challenges in practice

It is essential that the scope of the divestment business is clearly identified so that any
hold-separate obligations can be implemented effectively.7
The commitments require that the divestment business is managed as a distinct and sale-
able entity separate from the retained business. Typically, hold-separate obligations require the
appointment of a hold-separate manager (HSM), supervised by a trustee, to manage the divest-
ment business independently and in its best long-term commercial interests until closing. In
addition, the commitments will usually define key personnel of the divestment business.
The HSM is responsible for the day-to-day management of the divestment business, includ-
ing reporting to the trustee on the fulfilment of hold-separate obligations by the parties. It is
important that the HSM carries out its duties throughout the divestiture period until closing
to guarantee the stability of the divestment business. The same is true for the key personnel.
One of the key issues we have observed in practice is if the HSM or key personnel leave
before the divestment business is sold. This generates uncertainty for the divestment busi-
ness and can jeopardise the overall performance of the divestment business, something the
Commission would be very concerned about.
Whether the HSM or key personnel transfer to the purchaser will depend on the purchaser’s
long-term strategic vision for its business and integration plans. Furthermore, the HSM or key
personnel may not be able to return to the retained business immediately after the divestiture
period as a result of, among others, ring-fencing and confidentiality constraints. In this context,
it is important that the HSM and key personnel receive a remuneration package that is attrac-
tive enough to encourage them to remain with the business until the closing of the divestiture.
6 The individual appointed by the seller to manage the divestment business independently in its best
long-term commercial interest as until the closing of the onsale.
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An attractive remuneration package should seek to provide incentives to maintain the viability
of the divestment business during the hold-separate period and to compensate for the uncer-
tainty after the sale of the divestment business.
If the divestment business is highly integrated in the retained business, the divestment
business might not include all the required functions to operate as a stand-alone business. In
these cases, staff from the retained business may provide support services to the divestment
business during the transitional period. This can be especially critical if the services involve
commercially sensitive functions such as sales support. If sales forces sell products from the
retained as well as divestment business, proper incentives must be implemented to prevent a
negative impact on sales of the divestment business. Ideally, it should also be possible to care-
fully track the purchasing behaviour of key customers of the divestment business to ensure
that there are no sudden or significant changes during the transitional phase.
Based on our experience, we would recommend that for the successful and timely imple-
mentation of hold-separate obligations, the following considerations may be relevant:
• identification of potential HSM candidates prior to the merger clearance decision.
Depending on the type of divestment in question, usual candidates considered for the role
vary between the following:
• existing managing director or general manager of the business (e.g., plant managers in
the case of plant divestment);
• recent retirees with significant experience in the field that would be more likely to take
on a temporary contract; and
• external consultants appointed on an exceptional basis when there are limited suit-
able candidates;
• offer of attractive remuneration packages for the HSM and key personnel to ensure that the
right incentives are in place to run the divestment business and to stay at least until clos-
ing. In many cases this may be only a temporary role that brings with it a lot of uncertainty
as purchasers may want to impose their own management and restructure or integrate the
business; and
• maintenance of incentives for staff of the retained business that provide services to the
divestment business to ensure that the performance of the divestment business does
not suffer.
Adequate ring-fencing provisions

The standard EC commitments template imposes ring-fencing obligations on the parties to the
transaction.8 To address this obligation, the parties are required to implement certain measures
to restrict the flow of confidential information relating to the divestment business, back to the
business that is being retained and vice versa. Furthermore, the merging parties are required to
eliminate confidential information obtained before the merger clearance decision; and where
possible, segregate IT systems that contain commercially sensitive information of the divest-
ment business.
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In practice, where the ring-fencing obligations apply to the divestment business of the seller,
it is easier to commence the planning of the ring-fencing measures before the commitments
come into force. This is because the seller understands the business being sold, including the IT
systems that are used to support the business and the information flows between the employ-
ees of the divestment business and retained business. This ensures a prompt implementation
of the ring-fencing commitments. Where the ring-fencing measures need to be implemented on
the side of the target, particularly in an up front purchaser scenario,9 the planning for the imple-
mentation of the ring-fencing measures could be delayed. This is because the seller is prevented
from freely exchanging information on the target business (owing to gun-jumping rules),
which, in turn, prevents the seller from understanding the scope of the business to be divested,
the systems in use and therefore the measures that would need to be employed to ensure that
the seller can meet its ring-fencing obligations when the approval decision is adopted.
Ring-fencing can be approached from two principal standpoints: ring-fencing of employees
(combined with the hold-separate obligations); and segregation of IT systems containing com-
mercially sensitive information of the divestment business.
Ring-fencing of employees
To ring-fence confidential information pertaining to the divestment business and prevent this
information flowing back to the retained business (with a view to ensuring the competitive-
ness of the business post-divestment), the parties typically require staff to sign a confidentiality
agreement. These agreements seek to clarify the confidentiality requirements in place during
the transitional period and ensure that staff who come into contact with commercially sensi-
tive information pertaining to a divestment business: share the information on a ‘need-to-know
basis’ only; pass on information only to those who are entitled to receive it (i.e., those who have
also signed a confidentiality agreement); and hold confidential information in confidence except
as necessary to perform their role – whether that be support of the sales process, provision of
hold-separate or transitional support services to the divestment business pre and post-closing,
or preparation of financial reports to support fiduciary reporting requirements, among others.
Confidentiality agreements should be executed as swiftly as possible after the decision
is adopted. Furthermore, in cases involving complex ring-fencing arrangements, regular
(monthly) confirmation from a ‘firewall manager’ that no breaches have taken place is helpful.
Ring-fencing of IT systems
In support of the ring-fencing measures, the parties to the transaction will need to implement
logical and physical separation of the IT systems in place that house confidential information
relating to the divestment business. This approach often requires cross-functional consulta-
tion with the business to map: which employees have access to information of the divestment
business; and the specific applications or systems that permit this access. Once this has been
established, the parties will need to determine the feasibility of segregating each application or
9 In cases involving an up front purchaser requirement, the main transaction may not be implemented
until the competition authority has adopted a decision approving of the purchaser of the divestment
business.
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restricting access through strict access controls. IT separation is often more resource-intensive
than the merging parties assume, but should go as far as possible in the time available and be
implemented expeditiously.
In certain situations the requirement to implement IT ring-fencing measures has come
as a surprise to the parties concerned, and therefore little planning has taken place prior to
the merger approval decision. A failure to appreciate this commitments obligation can place
unnecessary pressure on the parties and requires immediate resources to accelerate the imple-
mentation of the measures to meet the expectations of the competition authority. Furthermore,
in the case of complex enterprise resource planning tools or raw data databases, this can be
rather a complex exercise, particularly with systems that are difficult to segregate.
If the confidential information in an application or tool cannot be separated, access permis-
sions cannot be switched off, or the viability of the business would be compromised as a result
of the proposed segregation or the time needed to implement such segregation implies that the
measure will not be in force during the transition period, the competition authority will require
a detailed understanding of:
• what the application or system does, and how it is used and by whom;
• whether confidential information is contained in the system. If so, what type of informa-
tion and what the categories of data are;
• why it is not possible to ring-fence the information at all, or within the time frame of the
commitments; and
• what other measures can be put in place. This justification can often be supported by the
proposal that staff sign an agreement acknowledging the confidentiality requirements, as
described above.
Provided that the justifications from the parties are well reasoned (and the trustee, sometimes
with help from a technical expert, supports the conclusions reached), the competition authori-
ties have, in the past, adopted a pragmatic approach on the condition that supporting measures
(such as the confidentiality agreement approach) are also implemented.
For companies to avoid unforeseen issues with the implementation of ring-fencing com-
mitments, we would recommend the following:
• ensure planning starts as soon as possible if the divestment is on the acquirer side and that
the scope of the requirements in the commitments are fully understood, especially by the
IT function within the business;
• appoint suitable senior IT managers to take responsibility and oversee the sometimes com-
plex separation process;
• if the implementation of the measures is feasible and simple, progress as rapidly as possible;
• if it is not feasible to separate information in complex IT systems (such as SAP), ensure that
there is a robust justification as to why, which will withstand the scrutiny of the trustee
and the competition authority. If possible, adopt an alternative approach that ensures the
obligations are met. Some parties have prepared detailed training (in person or via an IT
platform) that can be delivered to employees to ensure the confidentiality requirements are
well understood;
• execute confidentiality agreements on a timely basis and be rigorous in the mapping of
employees who may have access to confidential information of the divestment business. It
is better to be over-inclusive than to miss a key function or individual; and
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• finally, take a sensible approach and always seek to balance the maintenance of the viability
of the divestment business against the requirement to implement ring-fencing measures.
If the implementation of IT ring-fencing measures would hamper the divestment business
operations, this is a practical and important consideration that should be brought to the
attention of the trustee and the competition authority.
Maintaining viability
The standard commitments template addresses the issue of preservation of the economic via-
bility, marketability and competitiveness of the divestment business to minimise any risk of
loss of competitive potential. Specifically, the merging parties are required to commit:
• not to carry out any action that might have a significant adverse impact on the value, man-
agement or competitiveness of the divestment business, or that might alter the nature
and scope of activity, the industrial or commercial strategy or the investment policy of the
divestment business;
• to make available sufficient resources for the development of the divestment business, on
the basis and continuation of the existing business plans; and
• to take all reasonable steps to encourage all key personnel to remain with the divest-
ment business.
Challenges to maintaining viability

The availability of and access to financial information supported by a strong finance function
are important for maintaining viability on an ongoing basis. In addition, insight from business
people on the performance of the business is essential. In one case, the business was previously
highly integrated and no prior year figures were available. At the same time, the finance func-
tion was performed by the retained business. Financial information during the hold-separate
period was provided, but no deeper analysis of the customer data was made available. Because
of this situation, the divestment business was only able to identify with significant delay that,
in fact, some small customers were leaving the divestment business. In the first few months
that customers started leaving, this effect was overcompensated for by seasonality effects and
therefore not directly visible in the monthly income statements.
The performance of the divestment business might also suffer from the main transac-
tion. In one case, the divestment business was part of the target of the main transaction and
a challenger in the market. The buyer in the main transaction was the market leader. With the
announcement of the main transaction, the divestment business was unable to continue its
growth path anymore as the market considered the divestment business as being part of the
buyer and also because of the uncertainty about the future purchaser of the divestment busi-
ness. The initial budget of the divestment business was no longer realistic, and the performance
of the divestment business could not be assessed by comparing it with the business plan.
Another challenge for the viability can be the maintenance of the appropriate level of capi-
tal expenditure during the transition. Significant levels of capital expenditure may be required
to ensure the divestment business can operate effectively and enable the execution of existing
business plans. It is clear that capital expenditure for maintenance is required to maintain the
viability. However, the divestment business might also want to make additional investments.
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Whether the divestment business is allowed to execute such investments depends on the spe-
cific situation. The effects on the viability as well as on the sales process need to be considered.
Typical questions raised in this context are the following:
• Are these investments included in the budget and would they have been performed in the
ordinary course of business?
• Can the assets be rented instead of purchased?
• How will these investments affect the sales process?
The examples show that the divestment business needs to have proper access to financial data
that the HSM can use for the management of the divestment business. For the assessment of the
actual performance of the divestment business during the hold-separate period, the right compar-
atives have to be identified. If, for whatever reason, historical figures or the business plan are not
useful for this assessment, the issue must be explained to the trustee and competition authority
so that the seller, divestment business, trustee and competition authority have the same expec-
tations regarding the performance of the divestment business during the hold-separate period.
We recommend clear communication between the seller and the divestment business to
solve issues around capital expenditure to find a balanced solution. We also recommend ensur-
ing the HSM has the authority to action capital expenditure within specific thresholds, with
agreed policies and procedures to be followed for these to be exceeded.
Recent trends
We have noted that the number of upfront purchaser remedies has been increasing in Europe
in recent years.
In an upfront purchaser remedy, the main transaction may only close once the purchaser
of the divestment business has been approved by the competition authority. The upfront pur-
chaser remedy provides a higher degree of certainty for the competition authority that a remedy
will be effectively implemented, especially in cases where there is a perception that it might be
difficult to find a purchaser for the divestment business, particularly in carve-out cases. The
upfront purchaser requirement places considerable demands on the seller who must organise
a sales process while remaining responsible for holding separate the assets (possibly of the tar-
get) before it may consummate the main transaction.
Conclusions
The seller’s situation is a complex one. The main transaction is often yet to be completed and
the business operations of the merging parties must be integrated. At the same time, the seller
must dispose of and maintain the viability of the divestment business. Customers and staff of
the divestment business must be retained during a long period of uncertainty that begins with
the planning of the main transaction and does not end until the divestment business is sold.
The divestment business needs to focus on the market, but at the same time it may be
required to support the sales process by management presentations and Q&A sessions during
the due diligence phase. The seller must ensure that the divestment business is held separate
and confidential information is ring-fenced and eliminated from the retained business (with
some limited exceptions). The transaction documents need to reflect the commitments and, if
it is a global divestment business, the seller will need to consider the requirements of different
regulators around the world.
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Our key messages for ensuring a smooth implementation of the commitments are as follows:
• Properly define the scope of the divestment business including clear management struc-
tures and reporting lines. This comprises the assets, identification of HSM candidates, key
personnel, shared services and required IT systems, as well as plans for the carve-out and
required transitional service agreements.
• Detailed planning of the sales process will help the seller to maintain momentum and com-
petitive pressure in the process, and maximise the prospects of concluding a sale with a
suitable purchaser.
• The considered appointment of the HSM and the implementation of attractive remunera-
tion schemes for the staff of the divestment business lay the groundwork for the successful
disposal and viability of the divestment business during this period.
• The hold-separate structure and ring-fencing measures should start well before the deci-
sion of the competition authority is made.
• Close communication with the trustee and the competition authority is essential. This
ensures that any compliance issues regarding terms of sale or the commitments in general
can be identified at an early stage and can be resolved so as to smooth the pathway to a suc-
cessful onsale.
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12
Enforcement of Merger Consent Decrees
Juan A Arteaga1
The US Department of Justice (DOJ) and the Federal Trade Commission (FTC) have long rec-
ognised that their strong commitment toward prosecuting consent decree violations helps
ensure that merging companies comply with their decree obligations and that merger rem-
edies are effective. For instance, the DOJ’s Policy Guide to Merger Remedies expressly pro-
vides that the Antitrust Division ‘will not hesitate to bring actions to enforce consent decrees’
because the Division has a ‘responsibility to the public interest, as well as to the court . . . to
ensure strict implementation of and compliance with the agreed-upon remedy.’2 Similarly,
the FTC has emphasised that its consent decrees must be ‘vigorously enforce[d]’ in order to
‘make clear . . . that [its] orders are to be taken seriously’.3 Federal courts have likewise stressed
the importance of robust enforcement of merger consent decrees. In United States v. Boston
Scientific Corp, for example, the court held that ‘there is a compelling interest in vindicating the
1 Juan A Arteaga is a partner at Crowell & Moring LLP.

2 US Dep’t of Justice, Antitrust Div, Policy Guide to Merger Remedies at 40–41 (October 2004) (the DOJ
Merger Remedies Guide), available at www.justice.gov/atr/page/file/1175116/download; see also Press
Release, US Dep’t of Justice, Court Finds Smith International and Schlumberger Ltd. Guilty of Criminal
Contempt for Violating Consent Decree at 2–3 (9 December 1999) (the Smith International Press
Release) (‘This ruling sends a strong message that companies must comply with antitrust consent
decrees . . . . Consent decrees are an essential tool in our efforts to enforce the antitrust laws, and this
ruling clearly demonstrates that companies subject to consent decrees must respect the rule of law.’
(internal quotation marks and citation omitted)), available at www.justice.gov/archive/atr/public/
press_releases/1999/3948.pdf.
3 Memorandum from FTC Commissioner Rohit Chopra to Commission Staff and Commissioners at
1, 3 (14 May 2018), available at www.ftc.gov/system/files/documents/public_statements/1378225/
chopra_-_repeat_offenders_memo_5-14-18.pdf.
138
authority of the FTC in enforcing its consent decrees’ because ‘otherwise, parties to anticompet-
itive mergers will have every incentive to sign a consent decree to induce the FTC to withdraw
its injunction, and then breach the promises made in the order.’4
Over the past two years, the DOJ and FTC have made a concerted effort to remind companies
– both through their public statements and enforcement actions – that they must take their
consent decree obligations seriously and that their failure to do so could subject them to large
fines and other penalties. In announcing a recent enforcement action related to the violation of
a non-merger consent decree, FTC Chairman Joseph Simons stated that the ‘record-breaking
$5 billion penalty’ and ‘sweeping’ reforms to the company’s corporate governance structure and
business operations shows that the FTC ‘will enforce [its] orders to the fullest extent of the law.’5
While this enforcement action involved a non-merger consent decree, Chairman Simons has
similarly taken a tough stance on the need to vigorously enforce merger consent decrees. While
serving as the FTC’s Competition Bureau Director, Chairman Simons warned companies that
they could face stiff consequences if they fail to honour their decree obligations:
We are pleased that [the court] has underscored, with this [$7 million] penalty, the
importance of complying with the FTC’s orders. The penalty here should serve as
a clear signal to all firms under FTC order that they must abide by those terms or
face severe consequences. Penalties are meant to penalize and deter, and we hope
that everyone will take that lesson from the result here.6
Likewise, in announcing a recent enforcement action arising out of a merger consent decree
violation, Assistant Attorney General Makan Delrahim stressed that the merging companies
were required to pay a daily fine until they completed the necessary divestitures, as well as
reimburse the Antitrust Division for its investigatory and litigations costs, because the ‘Division
takes seriously the enforcement of commitments parties make when [entering decrees].’7 In his
most recent congressional testimony, Assistant Attorney General Delrahim re-emphasised the
Antitrust Division’s commitment to vigorously enforcing its consent decrees by noting that the
4 253 F Supp 85, 101 (D Mass 2003); see also Bench Decision at 1 (‘[I]t is clear that consent decrees issued by
the Antitrust Division and signed by the courts[ ] must be followed.’), United States v. Smith Int’l Inc, No.
93-2621-SS (D DC 9 December 1999) (the Smith Int’l Bench Decision), available at www.justice.gov/atr/
5 Press Release, Fed Trade Comm’n, FTC Imposes $5 Billion Penalty and Sweeping New Privacy
Restrictions on Facebook (24 July 2019), available at www.ftc.gov/news-events/press-releases/2019/07/
ftc-imposes-5-billion-penalty-sweeping-new-privacy-restrictions.
6 Press Release, Fed Trade Comm’n, Federal Judge Issues Record $7 Million Fine Against Boston
Scientific Corporation (31 March 2013) (the Boston Scientific Press Release), available at www.ftc.gov/
news-events/press-releases/2003/03/federal-judge-issues-record-7-million-fine-against-boston.
7 Press Release, US Dep’t of Justice, Justice Department Requires General Electric Company to Make
Incentive Payments to Encourage Completion of Divestitures Agreed to as a Condition of Baker Hughes
Merger (17 Oct 2017) (the GE Press Release), available at www.justice.gov/opa/pr/justice-departmen
t-requires-general-electric-company-make-incentive-payments-encourage.
139

Division has implemented various changes to its policies and practices that are specifically
intended to ‘strengthen [the Division’s] ability to ensure decree compliance’ and ‘enforce . . . the
[agreed-upon] remedy.’8
Thus, while entering into a consent decree allows merging parties to avoid a government
challenge to their proposed transaction, they should fully understand that the DOJ and FTC
will carefully monitor their compliance with the decree and will be more than willing to bring
an enforcement action seeking, among other things, significant injunctive relief and large mon-
etary penalties if they determine that a party has failed to do so.
The fact that the DOJ and FTC have brought a relatively small number of formal enforce-
ment actions should not be read by merging companies as suggesting that they can ignore their
commitments under a consent decree. The bulk of the agencies’ consent decree enforcement
efforts occur through non-public administrative processes, which, among other things, require
companies to expend significant time and resources on extensive monitoring by the agencies
(and trustees) and on responding to investigations that the agencies conduct whenever they
have reason to believe a violation may have occurred. These administrative investigations into
possible decree violations can often last more than a year and typically require companies to
produce large volumes of information, submit written interrogatory responses, and make their
employees available for interviews.
Moreover, merging companies should anticipate an uptick in the number of formal consent
decree enforcement actions that the agencies file in court in the coming years. During the past
two years, the DOJ has added several new ‘standard’ provisions to its merger consent decrees
that are specifically intended to enhance the Antitrust Division’s ability to successfully pros-
ecute consent decree violation actions in court, as well as increase the express relief that the
Division can seek when bringing such actions. These new consent decree provisions require
merging companies to expressly agree to lowering the evidentiary standard that the DOJ must
satisfy when bringing a decree enforcement action; reimbursing the DOJ for its investigatory
and litigation costs (if a violation is established); and the possible extension of the decree’s term
(if a violation is established). In addition, the DOJ Antitrust Division has announced that it
intends to create an Office of Decree Enforcement that will focus on ensuring strict compliance
with and strong enforcement of the Division’s consent decrees.
While the FTC – which already has a decree enforcement unit – has not included any of
these provisions in its recent merger consent decrees, the absence of such provisions should
not automatically be read to mean that the FTC has officially declined to follow the DOJ’s lead.
Although the DOJ and FTC have taken opposing positions on certain policy issues and enforce-
ment actions during the past year, they historically have sought to minimise any differences
8 Makan Delrahim, Assistant Attorney General, US Dep’t of Justice, Antitrust Div, Prepared Statement for
Oversight Hearing on the Antitrust Enforcement Agencies at 9 (12 December 2018) (the AAG Delrahim
Congressional Testimony), US House of Representatives, Judiciary Committee, Subcommittee on
Regulatory Reform, Commercial and Antitrust Law, available at www.justice.gov/sites/default/files/
testimonies/witnesses/attachments/2018/12/13/atr_delrahim_oversight_testimony_for_hjc_12.12.18_
clear.pdf; see also Makan Delrahim, Assistant Attorney General, US Dep’t of Justice, Antitrust Div,
Remarks Delivered at the New York State Bar Association: Improving the Antitrust Consensus at 4
(25 Jan 2018) (the AAG Delrahim NY Bar Speech) (‘Our approach will be to enter into consent decrees
only when we can effectively enforce them, and when we do enter into consent decrees, to enforce them
effectively.’), available at www.justice.gov/opa/speech/file/1028896/download.
140

in their enforcement approaches. Thus, until the FTC makes an official pronouncement to the
contrary, it remains possible that the FTC could decide to begin including these provisions in its
merger consent decrees.
In providing an overview of the penalties that companies may face if they are found to have
violated a consent decree, this chapter discusses: (1) the legal principles that generally govern
enforcement actions brought by the DOJ and FTC when they determine that a party has violated
a consent decree; (2) the key standard consent decree provisions that the DOJ and FTC utilise
to ensure the merging parties’ compliance; (3) recent DOJ initiatives intended to increase the
DOJ’s ability to enforce its consent decrees in court; and (4) key merger consent decree enforce-
ment actions that the DOJ and FTC have successfully prosecuted and the relief secured in
these actions.
Legal principles governing merger consent decree enforcement actions

If the DOJ determines that a party has violated a consent decree, it has the authority to file a civil
or criminal contempt action (or both) that seeks injunctive relief, monetary penalties, impris-
onment and other equitable relief.9 As the DOJ’s merger remedies guidelines note, civil con-
tempt proceedings serve ‘a remedial purpose – compelling compliance with the court’s order or
compensating the complainant for losses sustained’, whereas criminal contempt proceedings
serve a punitive and deterrence purpose – ‘punish[ing] the violator, . . . vindicat[ing] the author-
ity of the court, and . . . deter[ring] others from engaging in similar conduct in the future’.10
To prevail in a civil contempt action, the DOJ must prove with clear and convincing evi-
dence that a lawful decree exists, the defendant had knowledge of the decree, and the defendant
violated a clear and unambiguous provision of the decree.11 (But see the section below titled
‘DOJ civil contempt actions are now governed by a preponderance of evidence standard’.) Unlike
in criminal contempt proceedings, the DOJ need not show that the defendant intentionally or
wilfully violated the decree when seeking to hold a party in civil contempt.12
In civil contempt actions, the DOJ may seek injunctive relief, fines that accumulate on a
daily basis until compliance is achieved, and attorney’s fees and costs.13 Moreover, the DOJ may
seek additional equitable remedies that are intended to ensure compliance with the decree and
remedy the harm caused by the decree violation, including the rescission of the transaction
in question, disgorgement of any unlawful profits and imposition of conditions on the violat-
ing party’s ability to pursue future transactions.14 In determining the appropriate fine amount,
9 See, e.g., DOJ Merger Remedies Guide, supra note 2, at 43–44; Smith Int’l Bench Decision, supra note 4, at
2–4.
10 DOJ Merger Remedies Guide, supra note 2, at 43.
11 See, e.g., United States v. Microsoft Corp, 147 F.3d 935, 940 (DC Cir 1998); Washington-Baltimore
Newspaper Guild v. Washington Post, 626 F.2d 1029, 1031 (DC Cir 1980); United States v. Greyhound Corp,
363 F Supp 525, 570 (ND Ill), aff’d, 508 F.2d 529 (7th Cir 1974).
12 McComb v. Jacksonville Paper Co, 336 US 187, 191 (1949) (listing cases).
13 DOJ Merger Remedies Guide, supra note 2, at 43; Memorandum of the United States in Support of
Petition for An Order to Show Cause Why Respondents Smith International, Inc. and Schlumberger
Ltd. Should Not Be Found in Civil Contempt at 11, United States v. Smith Int’l Inc, No. 93-2621-SS (D DC
27 July 1999) (the Smith Int’l Civil Contempt Motion), available at www.justice.gov/atr/case-document/
memorandum-united-states-support-petition-united-states-order-show-cause-why.
14 DOJ Merger Remedies Guide, supra note 2, at 43 n. 60; Smith Int’l Bench Decision, supra note 4, at 2–4.
141

courts seek to impose a fine that will ensure the violating party’s immediate and continued
compliance with the decree, and that will remedy the harm caused by the violation.15 Among
other factors, courts often consider the nature of the violation, the harm caused by the viola-
tion, and the violating party’s ability to pay when calculating the appropriate fine amount.16
If the DOJ seeks to hold a party in criminal contempt for violating a merger consent decree,
it must prove beyond a reasonable doubt: (1) the elements of civil contempt; and (2) that the
defendant wilfully violated the consent decree.17 To satisfy the wilfulness element, the DOJ
must establish that the defendant acted with deliberate or reckless disregard with respect to its
obligations under the decree.18 In bringing a criminal contempt action, the DOJ can seek ‘a fine,
or imprisonment, or both’.19 In determining the appropriate fine amount, courts consider vari-
ous factors, including the violating party’s ability to pay; the degree to which the violating party
knew its conduct was prohibited under the consent decree; the harm caused by the violation;
the violating party’s motives and the benefits that it derived from the violation; and the extent
to which the violating party cooperated with the DOJ’s investigation and enforcement action.20
With respect to FTC merger consent decrees, the Federal Trade Commission Act (FTCA)
grants the FTC the authority to file enforcement actions that seek civil penalties.21 Prior to bring-
ing such an action, the FTC is required, pursuant to the FTCA, ‘to give the [DOJ] 45 days advance
notice, in case the [DOJ] decides to bring the case in the name of the United States’.22 However, in
competition matters (such as the enforcement of the FTC’s merger consent decrees), the ‘[DOJ]
has agreed informally that it will generally allow the [FTC] to bring the action its own name’.23
In bringing a merger consent decree enforcement action, the FTC can seek the imposition of
US$42,530 in fines for each day that the party has failed to comply with the decree.24 Moreover,
the FTC can ask the court to exercise its express statutory authority to ‘grant mandatory injunc-
tions and such other and further equitable relief as [it] deem[s] appropriate in the enforcement
of [the FTC’s consent decree]’.25
15 United States v. IBM Corp, 60 FRD 658, 667 (SDNY 1973); Smith Int’l Bench Decision, supra note 4, at 2–4;
DOJ Merger Remedies Guide, supra note 2, at 43.
16 IBM, 60 FRD at 667 (citing United States v. United Mineworkers of Am, 330 US 258, 303–04 (1947) and
Sweetarts v. Sunline Inc, 299 F Supp 572, 579 (ED Mo 1969)).
17 See, e.g., IBM, 60 FRD at 667; United States v. NYNEX Corp, 8 F.3d 52, 54 (DC Cir 1993); DOJ Merger
Remedies Guide, supra note 2, at 43–44.
18 See, e.g., Smith Int’l Bench Decision, supra note 4, at 2–4; United States’ Post-Trial Brief 18 (listing cases),
United States v. Smith Int’l Inc, No. 1:93-cv-02621-SS (D DC 3 December 1999) (the Smith Int’l Post-Trial
Brief), available at www.justice.gov/atr/case-document/file/511211/download.
19 DOJ Merger Remedies Guide, supra note 2, at 44; see also 18 USC Section 401; United States v. Schine,
125 F Supp 734, 737 (WDNY 1954).
20 See, e.g., Smith Int’l Bench Decision, supra note 4, at 2–4.
21 Fed Trade Comm’n, FTC Operating Manual Section 12.5.1 (January 1998), available at www.ftc.gov/sites/
default/files/attachments/ftc-administrative-staff-manuals/ch12compliance.pdf.
22 Id.
23 Id.
24 15 USC Section 45(l). As required by law, the original US$10,000 fine amount set forth in the FTCA
has been increased over the years to account for inflation. See Press Release, Fed Trade Comm’n,
FTC Publishes Inflation-Adjusted Civil Penalty Amounts (1 March 2018), available at www.ftc.gov/
news-events/press-releases/2019/03/ftc-publishes-inflation-adjusted-civil-penalty-amounts.
25 15 USC Section 45(l).
142

In calculating the appropriate fine to impose when an FTC consent decree has been vio-
lated, courts typically consider the following factors:
• harm to the public;
• benefit to the violator;
• good or bad faith of the violator;
• the violator’s ability to pay;
• deterrence of future violations by the violator or others; and
• vindication of the FTC’s authority.26
Standard compliance provisions within merger consent decrees

The DOJ and FTC typically require merging parties to agree to various reporting and monitoring
provisions that are designed to ensure that parties honour their decree obligations. Some of
these standard compliance provisions are discussed below.
Reporting and inspection obligations

The DOJ and FTC will typically reserve the right to (1) inspect the parties’ business records, doc-
uments, data and any other material related to all matters covered by the decree, and (2) inter-
view the parties’ personnel and agents regarding any topic covered by the decree.27 In addition,
the DOJ and FTC typically reserve the right to require the parties to submit written reports or
sworn written responses to interrogatories regarding their compliance with the decree.28
In general, consent decrees will provide that any compliance-related materials that parties
provide the agencies will not be disclosed to third parties except where the agencies seek to
enforce the decree, comply with a court order or other lawful disclosure obligation, or litigate
an action involving the executive branch of the federal government.29 If parties believe that
such material contains trade secrets or other confidential commercial information, they will
typically have the right to designate this material as ‘subject to a claim of protection under Rule
26(c)(1)(G) of the Federal Rules of Civil Procedure’.30 Such a designation will normally require the
agency to provide the producing party with sufficient notice (often 10 days) prior to producing
the material in any legal proceeding (other than a grand jury proceeding).31
26 Boston Scientific, 253 F Supp at 98 (citing cases).

27 See, e.g., Proposed Final Judgment at 30, United States v. Deutsche Telekom AG., No.1:19-cv-02232 (D D C
26 July 2019) ( T-Mobile PFJ), available at www.justice.gov/atr/case-document/file/1187771/download;
Final Judgment at 38, United States v. Bayer AG, No. 1:18-cv-01241 (D D C 29 May 2018) (Bayer FJ),
available at www.justice.gov/atr/case-document/file/1165136/download; Decision and Order at 19, CRH
plc (CRH Order), No. C-4653 (FTC 20 June 2018), available at www.ftc.gov/system/files/documents/
cases/1710230_crh_plc_order_to_maintain_assets.pdf; Decision and Order at 20, Air Medical Group,
No. C-4642 (FTC 3 May 2018) (Air Medical Group Order), available at www.ftc.gov/enforcement/
cases-proceedings/171-0217-c-4642/air-medical-group-kkr-north-america-amr-holdco.
28 See, e.g., T-Mobile PFJ, supra note 27, at 30; Bayer FJ, supra note 27, at 38; CRH Order, supra note 27, at 18;
Air Medical Group Order, supra note 27, at 19..
29 See, e.g., T-Mobile PFJ, supra note 27, at 31; Bayer FJ, supra note 27, at 38–39; Proposed Final Judgment at
15, United States v. The Walt Disney Co., No. 1:18-cv-05800 (SDNY 27 June 2018) ( Disney PFJ), available at
https://www.justice.gov/atr/case-document/file/1075176/download.
30 See, e.g., T-Mobile PFJ, supra note 27, at 31; Bayer FJ, supra note 27, at 39; Disney PFJ, supra note 29, at 15.
31 See, e.g., T-Mobile PFJ, supra note 27, at 15; Bayer FJ, supra note 27, at 39; Disney PFJ, supra note 29, at 15.
143

Appointment of a divestiture trustee

If a consent decree requires the merging parties to divest certain assets, the DOJ and FTC will
routinely include provisions requiring the parties (or any appointed trustee) to submit periodic
written reports detailing the efforts to complete the divestiture within the specified period (usu-
ally 90 to 120 days).32 In addition, the agencies will reserve the right to appoint a divestiture trus-
tee if the parties fail to complete the divestiture within the specified period.33
If a divestiture trustee is appointed, the trustee will have exclusive authority to complete the
divestiture and the parties will effectively be precluded from objecting to a sale that is secured
by the trustee and approved by the appointing agency.34 Moreover, the parties will be required
to: (1) pay the fees and expenses of the trustee and any consultants hired by the trustee; (2) pro-
vide the trustee with full access to their documents, facilities and personnel; and (3) assist the
trustee’s efforts to complete the divestiture, including preparing any written material requested
by the trustee (e.g., financial and operations reports detailing the performance and commercial
attributes of the divestiture assets).35
The divestiture trustee will typically be required to provide the appointing agency and, as
appropriate, the presiding court with periodic reports detailing the trustee’s efforts to complete
the divestiture.36 To the extent that such reports are submitted to the court, they will be filed
under seal if the trustee determines that the reports contain confidential information.37 If the
trustee fails to complete the divestiture within the specified period, the appointing agency can
seek an extension of the trustee’s appointment or the appointment of a substitute trustee.38
Appointment of monitoring trustee

The DOJ and FTC may reserve the right to appoint a monitoring trustee charged with observ-
ing and reporting on the merging parties’ compliance with the decree.39 As with a divestiture
trustee, if the agencies opt to appoint a monitoring trustee, the parties will be required to: (1)
pay the fees and expenses of the trustee and any consultants hired by the trustee; (2) provide the
trustee with complete access to their documents, facilities and personnel; and (3) fully assist
32 See, e.g., Disney PFJ, supra note 29, at 12–13; Bayer FJ, supra note 27, at 32–33; CRH Order, supra note 27, at
12–14; Air Medical Group Order, supra note 27, at 19.
33 See, e.g., Disney PFJ, supra note 29, at 8–10; CRH Order, supra note 27, at 14–17; Air Medical Group Order,
supra note 27, at 15–18.
34 See, e.g., Disney PFJ, supra note 29 at 8–9; CRH Order, supra note 27, at 14–17; Air Medical Group Order,
supra note 27, at 16.
35 See, e.g., Disney PFJ supra note 29, at 8–10; CRH Order, supra note 27, at 14–17; Air Medical Group Order,
supra note 27, at 16–17.
36 See, e.g., Disney PFJ, supra note 29, at 10; CRH Order, supra note 27, at 16; Air Medical Group Order, supra
note 27, at 17.
37 See, e.g., Disney PFJ, supra note 29, at 10; Modified Final Judgment at 22, United States v. Anheuser-Busch
InBev SA/NV, No. 1:16-cv-01483 (D.D.C. 22 October 2016) (the ABI FJ), available at www.justice.gov/atr/
38 See, e.g., ABI FJ, supra note 37, at 23; Disney PFJ, supra note 29, at 10–11; CRH Order, supra note 27, at 15, 17;
Air Medical Group Order, supra note 27, at 16, 18.
39 See, e.g., T-Mobile PFJ, supra note 27, at 25; Bayer FJ, supra note 27, at 33; CRH Order, supra note 27, at
12–14; Air Medical Group Order, supra note 27, at 13–16.
144

the trustee’s efforts to monitor their compliance with the decree.40 If the monitoring trustee
determines that the parties have violated the decree, the trustee will report the violation to the
appointing agency and recommend an appropriate remedy, which the agency can accept, reject
or modify when deciding whether to pursue a formal enforcement action.41
In general, the FTC has utilised monitoring trustees more regularly than the DOJ because
the DOJ has traditionally taken the position that the ‘appointment of a monitoring trustee
should be reserved for relatively rare situations where a monitoring trustee with technical
expertise unavailable to the [Antitrust] Division could perform a valuable role’.42 In explaining
this position, the DOJ has stated that ‘[i]n a typical merger case, a monitoring trustee’s efforts
would simply duplicate, and could potentially conflict with, the [Antitrust] Division’s own
decree enforcement efforts’.43 Recent merger decrees where the DOJ opted to reserve the right
to appoint a monitoring trustee include the T-Mobile/Sprint, Bayer/Monsanto, Anheuser-Busch
InBev/SABMiller, Verso Paper/NewPage and Anheuser-Busch InBev/Grupo Modelo decrees.44
Like a divestiture trustee, a monitoring trustee will be required to provide the appoint-
ing agency and, as appropriate, presiding court with periodic reports detailing the merging
companies’ compliance with the decree.45 To the extent any such reports are submitted to the
court, they will be filed under seal if the trustee determines that the reports contain confiden-
tial information.46
Recent DOJ initiatives designed to increase enforceability of merger

consent decrees
During the past two years, the DOJ has sought to strengthen its ability to enforce its merger con-
sent decrees by making several changes to its standard decree provisions and organisational
structure. For instance, the DOJ Antitrust Division has announced its intention to create an
Office of Decree Enforcement, which will have ‘the sole goal [of] ensur[ing] compliance with,
and enforcement of, [the Division’s consent] decrees’.47 While the DOJ has yet to disclose any
details about the structure, authority and resources of this new office, it could decide to use the
40 See, e.g., T-Mobile PFJ, supra note 27, at 25-27; Bayer FJ, supra note 27, at 33–35; CRH Order, supra note 25,
at 12–14; Air Medical Group Order, supra note 25, at 13–14.
41 See, e.g., Bayer FJ, supra note 27, at 33; ABI FJ, supra note 37, at 24–25.
42 DOJ Merger Remedies Guide, supra note 2, at 40.
43 Id.
44 See, e.g., T-Mobile PFJ, supra note 27, at 25; Bayer FJ, supra note 27, at 27; ABI FJ, supra note 37, at 24; Final
Judgment at 15, United States v. Verso Paper Corp, No. 1:14-cv-02216 (DDC 11 December 2015), available at
www.justice.gov/atr/file/813371/download; Final Judgment at 20, United States v. Anheuser-Busch InBev
SA/NV, No. 1:13-cv-00127-RWR (DDC 24 October 2013), available at www.justice.gov/atr/case-document/
file/486311/download.
45 See, e.g., T-Mobile PFJ, supra note 27, at 27; Bayer FJ, supra note 27, at 35; CRH Order, supra note 27, at 13,
16; Air Medical Group Order, supra note 27, at 14.
46 See, e.g., T-Mobile PFJ, supra note 27, at 27; Disney PFJ, supra note 29, at 10; Bayer FJ, supra note 27, at 35 ;
ABI FJ, supra note 37, at 26.
47 Makan Delrahim, Assistant Attorney General, US Dep’t of Justice, Antitrust Div, Keynote Address at the
University of Chicago’s Antitrust and Competition Conference: Don’t Stop Believin’: Antitrust Enforcement
in the Digital Era at 20 (19 April 2018), available at www.justice.gov/opa/speech/file/1054766/download.
145

FTC’s Compliance Division as a model. Among other things, the FTC’s Compliance Division is
responsible for overseeing compliance with the FTC’s orders, investigating possible violations
thereof, and bringing enforcement actions against non-complying parties.48
In addition, the DOJ has revised its antitrust consent decrees to include new standard
provisions ‘designed to ensure [that the Antitrust Division] can meaningfully enforce [these
decrees.]’.49 As discussed below, these provisions seek to: (1) lower the evidentiary standard that
the DOJ must satisfy when seeking to enforce a consent decree in court; (2) require parties to
reimburse the DOJ for its investigatory and litigation costs if they are found to have violated the
decree; and (3) allow the DOJ to obtain an extension of the decree if a violation is found to have
occurred.50
In light of these new provisions, companies entering into DOJ merger consent decrees must
ensure that they fully understand their decree obligations and can perform these obligations
within the prescribed time frames (i.e., completing divestitures, obtaining necessary govern-
mental approvals, and implementing appropriate compliance and monitoring programmes).
Otherwise, merging companies could find themselves the subject of an enforcement action
where the DOJ will have to satisfy a much lower evidentiary standard and could seek signifi-
cantly greater injunctive and monetary relief, including a lengthy extension of the decree’s term
and reimbursement for all costs associated with successfully investigating and prosecuting the
decree violation.
To date, the FTC has not required merging parties to agree to similar provisions prior to
approving a merger consent decree. The absence of such provisions could be another recent
example of the DOJ and FTC reaching directly opposite positions on an issue. However, it could
also mean that the FTC is continuing to study the issue and the impact that the inclusion of
these provisions has on the DOJ’s ability to effectively administer and enforce its consent
decrees. Thus, one key issue to monitor in the coming year is whether the FTC decides to follow
the DOJ’s lead or announces that it has opted not to do so.
48 Inside the Bureau of Competition, available at www.ftc.gov/about-ftc/bureaus-offices/

bureau-competition/inside-bureau-competition.
49 AAG Delrahim NY Bar Speech, supra note 8, at 3–4.
50 The DOJ has also begun including a provision which permits it, ‘after a certain number of years from the
date of [a consent decree’s] entry, to terminate the decree upon notice to the Court and the defendant(s)’.
Id. at 9. The DOJ has explained that this provision is intended to provide it with ‘a mechanism to
do away with decrees that no longer make sense for [the DOJ or merging parties]’ owing to market
changes. Id. at 8. Relatedly, the DOJ has also begun reviewing nearly 1,300 ‘legacy’ decrees (i.e., decrees
that have been in place for several decades and do not have a sunset provision) in order to ‘determine
whether these decrees are [still] necessary to protect competition and consumers’ in light of market
changes, legal and regulatory developments, and new economic thinking. AAG Delrahim Congressional
Testimony, supra note 8, at 9. This process has already resulted in the DOJ successfully moving to
terminate several ‘outdated’ decrees as part of its efforts to ‘better focus [its] resources and attention’ on
monitoring and enforcing antitrust decrees that continue to serve a procompetitive purpose. Id.
146

DOJ civil contempt actions are now governed by a preponderance of

evidence standard
As discussed in the above section entitled ‘Legal principles governing merger consent decree
enforcement actions’, the DOJ has historically been required to satisfy the clear and convincing
evidentiary standard when seeking to hold a party in civil contempt for violating a decree. Over
the past two years, the DOJ has sought to lower its burden of proof by requiring the parties to
agree that such actions will be governed by the preponderance of the evidence standard.51 In
doing so, the DOJ has explained that it has decided to ‘contract[ ] around’ the default clear and
convincing standard because:
• consent decree violation actions should be governed by the ‘same preponderance of the evi-
dence standard’ that would apply in a challenge to the underlying transaction that resulted
in the consent decree or an action seeking a decree interpretation;52
• ‘[t]he default clear and convincing evidence standard makes it difficult for the [Antitrust]
Division to enforce decrees’;53
• the need to satisfy the clear and convincing standard ‘sets up a dynamic’ that is ‘counter
productive for both parties’ given that the Antitrust Division, ‘needing to meet the height-
ened standard, must engage in extensive investigative efforts’ that ‘subject[ ] parties to more
burdensome CID investigations’;54 and
• the clear and convincing standard ‘adds burden and delay to decree violation investigations’
given that parties, ‘knowing they will have the benefit of a favorable evidentiary standard,
[have] an incentive to hold out from resolving disputes and exacerbate the situation’.55
Non-complying parties must reimburse the DOJ for investigatory and

litigation costs
Traditionally, the DOJ has borne the ‘costs of decree enforcement investigations and proceed-
ings, even in the presence of a serious violation of the decree and a meritorious judgment
from the court’.56 During the past two years, the DOJ has sought to reverse this default rule
by requiring parties to agree to a fee-shifting provision whereby they agree to reimburse the
DOJ for investigatory and litigation expenses ‘incurred in connection with any successful con-
sent decree enforcement effort’.57 The types of expenses covered by this fee-shifting provision
include ‘attorney’s fees, expert fees, and [other decree enforcement-related] costs’.58
The DOJ has explained that the inclusion of such fee-shifting provisions is both necessary
and appropriate because it ‘encourage[s] speedy resolution of decree violation investigations’
and ‘compensate[s] taxpayers for the costs’ that the DOJ incurs whenever parties fail to honour
51 See, e.g., T-Mobile PFJ, supra note 27, at 34–35; Bayer FJ, supra note 27, at 41; Disney PFJ, supra note 29, at
15-16; ABI FJ, supra note 37, at 33.
52 AAG Delrahim NY Bar Speech, supra note 8, at 6.
53 Id. at 7.
54 Id.
55 Id.
56 Id.
57 Id.; see, e.g., T-Mobile PFJ, supra note 27, at 35; Bayer FJ, supra note 27, at 42; Disney FJ, supra note 29, at
16; ABI FJ, supra note 37, at 34.
147

their commitments under a consent decree.59 The DOJ has also noted that most companies
entering into antitrust consent decrees are familiar with fee-shifting provisions because many
of them include such provisions in their commercial contracts.60
Violations can result in the extension of a merger consent decree’s term

The DOJ’s antitrust consent decrees typically last 10 years. In consent decrees entered during the
past two years, the DOJ has required parties to agree that the DOJ may seek a ‘one-time exten-
sion of the [decree’s] term’ if a court ‘finds that a defendant has violated the consent decree’.61 In
doing so, the DOJ has explained that these decree extension provisions ‘should make the relief
in decree enforcement proceedings more meaningful, and [thus] discourage violations’.62 The
DOJ has also explained that it would ‘only [seek a consent decree extension] if appropriate to the
market circumstances and the facts of the violation’.63
Although the DOJ has not provided any guidance as to what circumstances or facts would
cause it to seek a consent decree extension, it could potentially take into consideration the
violating party’s market power, the violating party’s efforts to comply with the consent decree
and motivations for engaging in the challenged conduct, the nature and extent of the violation,
the type and amount of harm caused by the violation, and the violating party’s past compli-
ance history.
Notably, the consent decrees that have included these extension provisions do not set
forth any parameters regarding the length of the extensions that the DOJ may seek in court.
This creates significant uncertainty and risks for merging parties because the DOJ could opt to
seek a lengthy extension and will only need to prove the appropriateness of this relief by a pre-
ponderance of the evidence.64 Moreover, these extension provisions could greatly increase the
expenses associated with entering into a merger consent decree where, for example, the decree
contains costly monitoring and imposes affirmative compliance obligations.
Overview of key merger consent decree enforcement actions

As noted above, the DOJ and FTC have brought a relatively small number of formal consent
decree enforcement actions in court. Nonetheless, these cases provide helpful guidance because
they show the types of facts that will cause the agencies to bring such actions and the type of
relief that they may seek when doing so. In addition, a review of these enforcement actions is
particularly timely given that the DOJ’s recent changes to its organisational structure and con-
sent decrees – which the FTC may eventually follow – could lead to an increase in the number of
formal merger decree enforcement actions that are brought by the agencies in the coming years.
59 Id.
60 Id. at 7–8.
61 Id. at 8; see, e.g., T-Mobile PFJ, supra note 27, at 35; Bayer FJ, supra note 27, at 41-42; Disney PFJ, supra note
29, at 16; ABI FJ, supra note 37, at 34.
63 Id.
64 See T-Mobile PFJ, supra note 27, at 34–35 (stating that DOJ ‘may establish . . . the appropriateness of any
remedy . . . by a preponderance of the evidence’); Bayer FJ, supra note 27, at 41 (same); Disney PFJ, supra
note 29, at 15–16 (same); ABI FJ, supra note 37, at 33 (same).
148

Smith International/Schlumberger
In 1994, the DOJ entered into a merger consent decree with Dresser Industries Inc (Dresser) and
Baroid Corp (Baroid).65 Pursuant to the decree, Dresser sold its controlling ownership interest
in a company that produced drilling fluids to Smith International Inc (Smith International).66
In acquiring this ownership interest, Smith International agreed to be bound by the Dresser/
Baroid consent decree, which prohibited Smith International ‘from selling the divested drilling
fluid business to, or combining that business with, the drilling fluid operations of certain com-
panies’, including Schlumberger Ltd (Schlumberger).67
In 1999, Smith International and Schlumberger entered into a joint venture agreement
whereby they sought to combine their drilling fluid business.68 In doing so, the companies
acknowledged that they would need to seek a modification of the Dresser/Baroid decree before
completing their proposed transaction.69 After seeking the DOJ’s consent to such a modifica-
tion, the companies decided to proceed with consummating their joint venture prior to the DOJ
completing its investigation.70 Thereafter, the DOJ sent the companies a letter indicating that
their proposed joint venture would constitute a violation of the Dresser/Baroid decree but the
companies nonetheless proceeded with finalising the transaction.71
The DOJ immediately brought an enforcement action seeking to hold both Smith
International and Schlumberger in civil and criminal contempt for violating the Dresser/Baroid
decree. Although Schlumberger was not a party to the decree, the DOJ argued that it should
nonetheless be held liable for the decree violation because it knowingly aided and abetted
Smith International’s purposeful decree violation.72 After concluding that the decree’s unam-
biguous language clearly prohibited the companies’ joint venture and that they chose to ignore
the DOJ’s express warnings that consummating their transaction would violate the Dresser/
Baroid decree, the court found Smith International and Schlumberger guilty of criminal con-
tempt and ordered each of them to pay a US$750,000 fine.73 The court also imposed a five-year
‘probationary condition’ that required them to obtain ‘an opinion from an outside counsel that
[any transaction that raises antitrust questions] complies with the antitrust laws’.74
In issuing its decision, the court stressed that ‘it is clear that consent decrees issued by the
Antitrust Division and signed by courts[ ] must be followed’, and that parties must follow the
formal process for obtaining decree modifications – where they can petition both the DOJ and
court for a desired decree modification – rather than simply pursuing transactions that risk vio-
lating the decree.75 However, the court also stressed that it opted to impose a fine that was lower
than the amount it was authorised to order because the companies cooperated with the DOJ’s
65 Smith International Press Release, supra note 2, at 2.

66 Id.
67 Id.
68 See Smith Int’l Civil Contempt Motion, supra note 13, at 5.
69 Id.
70 Id. at 6.
71 Id. at 7.
72 Id. at 8–11.
73 Smith Int’l Bench Decision, supra note 4, at 2–4.
74 Id. at 3.
75 Id. at 1–2.
149

efforts to obtain discovery that proved central to its case.76 In doing so, the court stated that it
‘want[ed] the word to go out’ that courts will impose lower fines when companies ‘cooperate and
do these kinds of things’.77
After being found guilty of criminal contempt, the companies agreed to settle the DOJ’s civil
contempt case for US$13.1 million, which ‘represented a full disgorgement of all of the joint ven-
ture’s profits during the time that the companies were in contempt’.78
Boston Scientific Corporation

In 1995, Boston Scientific Corp (BSC) entered into a consent decree in order to settle the FTC’s
challenge to its acquisition of CVIS, which manufactured ultravascular ultrasound (IVUS)
catheters. As part of the decree, BSC agreed to ‘share its IVUS catheter technology, licenses, and
know-how with HP [Hewlett-Packard Co]’.79 The FTC required BSC to agree to these conditions in
order to facilitate HP’s entry as a competitor to BSC in the market for IVUS catheters.80 Although
BSC provided some information and products to HP, it withheld certain intellectual property
when the companies were unable to reach an amicable resolution regarding whether the con-
sent decree required BSC to make these assets available to HP.81
After learning about the companies’ dispute, the FTC’s Compliance Division provided the
companies with its interpretation of the consent decree, which disagreed with BSC’s position.
Thereafter, the companies unsuccessfully sought to settle their dispute and HP eventually
exited the IVUS catheter market.82 The FTC subsequently brought a consent decree violation
action against BSC and sought US$35 million in civil penalties.83
The court held that BSC violated the consent decree and ordered it to pay nearly US$7.1 mil-
lion in fines. In determining the appropriate fine amount, the court considered the following six
factors that courts routinely apply in FTC decree enforcement actions: (1) harm to the public;
(2) benefit to the violator; (3) good or bad faith of the violator; (4) the violator’s ability to pay; (5)
deterrence of future violations by the violator or others; and (6) vindication of the FTC’s authori-
ty.84 With respect to each of these factors, the court found that:
• ‘BSC’s conduct harmed the public because its violations of the [FTC’s decree] were a substan-
tial contributing cause of HP’s decision to withdraw from the IVUS catheter market’; 85
• there was an insufficient basis to assess the economic benefits that BSC derived from violat-
ing the decree because ‘the record [was] not clear on the correct methodology for determi
ning [these benefits]’; 86
76 Id. at 3.
77 Id.
78 Smith International Press Release, supra note 2, at 1.
79 Boston Scientific Press Release, supra note 6.
80 Id.
81 253 F Supp 2d at 91–97.
82 Id. at 95–98.
83 Id. at 86.
84 Id. at 98.
85 Id. at 98–100.
86 Id. at 100–01.
150

• BSC acted in bad faith when it ‘chose to take the risk of ignoring the FTC’s staff [consent
decree] interpretation’ and to ‘see how close it could fly to the sun with impunity’ because it
believed that seeking a formal FTC advisory opinion ‘would worsen the situation for BSC’;87
• BSC – which had a market capitalisation in excess of US$10 billion – had not ‘raise[d] an
inability to pay’ argument; 88 and
• strictly enforcing the decree against BSC served the ‘compelling interest’ of ensuring that
‘FTC orders [are] not . . . disregarded with impunity’ given that the facts showed that ‘BSC
received a 90% market share by entering into [the] consent order and then proceeded to vio-
late’ the ‘letter’ and ‘spirit of the consent order’ by pursuing the ‘goal [of] driv[ing] HP out of
the IVUS catheter market’. 89
Exelon Corporation
In 2011, Exelon Corporation (Exelon) entered into a consent decree with the DOJ in connection
with its acquisition of Constellation. As part of the consent decree, Exelon agreed to divest three
electricity plants and entered into a hold separate agreement that required Exelon ‘to bid cer-
tain of its electricity generating plants at or below cost to ensure that Exelon would not be able
to raise market prices for electricity’ between the time it ‘closed the acquisition and divested the
plants’.90 Exelon violated this requirement by submitting ‘certain offers for sales of electricity
during this period at above-cost prices’ and by ‘fail[ing] to take all necessary steps to ensure that
its offers would comply with the hold separate requirements’.91
The record showed that ‘Exelon’s above-cost offers were inadvertent’ and that:
Exelon, upon recognizing that it had made above-cost offers, took appropriate
remedial steps, including notifying the [DOJ] and market regulators[,] . . . imple-
menting measures to ensure that no additional above-cost offers occurred, and
agreeing with the market regulators to return any incremental revenues Exelon
earned from, and to redress any market harm caused by, its above-cost offers.92
Nonetheless, the DOJ moved to hold Exelon in civil contempt and obtained a US$400,000 fine,
which ‘represent[ed] disgorgement of profits gained through Exelon’s [decree] violations and
reimbursement to the [DOJ] for the cost of its investigation’.93
In bringing this decree enforcement action, the DOJ stressed that ‘companies must fully
adhere to the terms of their court-ordered agreements’ and that the DOJ ‘will vigorously prosecute
those who enter into agreements with the [DOJ] and do not comply with their legal obligations’.94
87 Id.
88 Id. at 101.
89 Id. at 101–02.
90 Press Release, US Dep’t of Justice, Justice Department Settles Civil Contempt Claim Against Exelon
Corporation (15 November 2012), available at www.justice.gov/opa/pr/justice-department-settles-civil-
contempt-claim-against-exelon-corporation.
91 Id.
92 Id.
93 Id.
94 Id.
151

General Electric/Baker Hughes

In 2017, General Electric Co (GE) entered into a consent decree with the DOJ in connection with its
acquisition of Baker Hughes Inc. As part of the consent decree, GE agreed to divest its worldwide
water and technologies business to Suez SA (Suez) by the end of September 2017.95 GE completed
90 per cent of this divestiture within the agreed upon time frame but was unable to divest the
remaining 10 per cent because of various administrative challenges in certain jurisdictions.96
To further incentivise GE to promptly complete the outstanding divestitures, the DOJ
required GE to agree to pay US$1,500 per day (after a certain date) until the outstanding divesti-
tures in each jurisdiction were completed.97 The DOJ also required GE to agree to ‘reimburse the
[DOJ] $50,000 for attorney’s fees and costs [that it] incurred . . . in connection with [addressing
GE’s failure to complete the divestitures within the agreed upon timeframe]’.98 The DOJ sought
this relief even though it ‘recognize[d] and commend[ed] [GE] for its proactive cooperation in
resolving the issues arising from the incomplete execution of the required divestitures within
the original timeframe’.99
Work Wear Corp

In 1968, Work Wear Corp (WWC) acquired a number of industrial laundries. To address the DOJ’s
concerns, WWC entered into a consent decree that required it to divest 11 industrial laundry
facilities.100 Despite receiving an extension from the DOJ and divesting certain facilities, WWC
was unable to divest all 11 facilities within the specified period because it received an unfavour-
able Internal Revenue Service (IRS) determination regarding a proposed spin-off of these assets.
Thereafter, the DOJ brought a civil contempt action after rejecting WWC’s request to modify
the decree , which, if accepted, would have reduced the number of facilities that WWC had to
divest.101 Even though it found that WWC had technically violated the consent decree, the dis-
trict court declined to hold the company in contempt because WWC had acted in good faith
and because WWC’s ability to complete the necessary divestitures was stymied by economic
conditions outside its control. However, the district court warned WWC that it would be fined
$5,000 per day if it failed to complete the remaining divestitures within the 16-month extension
that it received.102
After the DOJ rejected a proposed buyer and the IRS again rendered an unfavourable ruling
for another proposed spin-off, WWC failed to complete the outstanding divestitures within the
extension period, which resulted in its being held in contempt and fined over US$1 million.103
While its appeal was pending, WWC completed the necessary divestitures and negotiated a set-
tlement with the DOJ that cut its fine in half. However, the district court rejected the parties’
95 GE Press Release, supra note 7.

96 Id.
97 Final Judgment at 5, United States v. General Electric Co, No. 1:17-cv-01146-BAH (DDC 16 October 2017),
available at www.justice.gov/atr/case-document/file/1056411/download.
98 Id. at 8.
99 GE Press Release, supra note 7.
100 United States v. Work Wear Corp., 602 F.2d 110, 111-12 (6th Cir. 1979).
101 Id. at 112.
102 Id. at 112–13.
103 Id. at 113-14.
152

proposed settlement, stating that accepting the parties’ efforts to reduce the fine, ‘without just
cause or a showing of mitigating circumstances, would denigrate the authority of the Court and
sanction mere lip service to its Orders.’104 The district court also found the DOJ’s efforts to nego-
tiate a lower fine to constitute a ‘presumption upon the jurisdiction and authority of the Court
and an interference with its power of contempt.’105
On appeal, the Sixth Circuit affirmed the district court’s refusal to accept the parties’ pro-
posed lower fine because the district court’s decision was entitled to ‘deference’ given its ‘inti-
mate familiarity . . . with the . . . drawn-out proceedings, and its patient granting of an initial
extension of time for compliance.’106 Notably, the Sixth Circuit affirmed the district court’s deci-
sion despite noting that it ‘very well may have acted favorably on [WWC’s] appeal’ had it been
applying a de novo, rather than abuse of discretion, review.107
CoreLogic/DataQuick
In 2014, CoreLogic, Inc – a provider of real estate data and analytics – entered into a consent
decree with the FTC in connection with its acquisition of DataQuick Information Systems, Inc.
As part of the consent decree, CoreLogic agreed to license certain data and provide transitional
services to a new market entrant, Renwood RealtyTrac LLC.108 After CoreLogic failed to comply
with its data licensing obligations, the FTC required the company to agree to a three-year exten-
sion of the consent decree and several decree modifications that expressly set forth specific qual-
ity metrics and other requirements related to CoreLogic’s licensing and servicing obligations.109
Morton Plant Hospital/Mease Hospital

In 1994, Morton Plant Hospital Association (Morton) and Mease Hospital (Mease) entered into
a consent decree with the DOJ that permitted the hospitals to create a partnership that would
provide certain outpatient and administrative services, but explicitly prohibited them from: (1)
jointly selling services; (2) jointly contracting with third parties; and (3) sharing information.110
In 2000, the DOJ brought a civil enforcement action against Morton and the Trustees of Mease
for ‘repeated and widespread violations’ of the consent decree.111 The hospitals settled with the
DOJ and ‘admit[ted] to repeated violations of the [consent] decree, [which] includ[ed] coordinat-
ing managed care contracting, jointly selling services, and sharing competitive information’.112
104 Id. at 114.

105 Id.
106 Id. at 116.
107 Id.
108 Press Release, Fed. Trade Comm’n, FTC Puts Conditions on CoreLogic, Inc’s Proposed Acquisition
of DataQuick Information Systems (24 March 2014), available at www.ftc.gov/news-events/
press-releases/2014/03/ftc-puts-conditions-corelogic-incs-proposed-acquisition-dataquick.
109 Press Release, Fed Trade Comm’n, FTC Adds Requirements to 2014 Order to Remedy CoreLogic
Inc’s Compliance Deficiencies (15 March 2018), available at www.ftc.gov/news-events/
press-releases/2018/03/ftc-adds-requirements-2014-order-remedy-corelogic-incs-compliance.
110 Press Release, US Dep’t of Justice, Justice Department Requires Hospitals to Enter into Enforcement
Order to Remedy Consent Decree Violations at 1 (12 July 2000), available at www.justice.gov/archive/atr/
public/press_releases/2000/5147.pdf.
111 Id.
112 Id.
153

The hospitals agreed to pay a US$300,000 civil penalty and to reimburse the DOJ (and State of
Florida) approximately US$200,000 for the costs incurred in connection with the decree viola-
tion investigation.113 Moreover, the hospitals agreed to refrain from engaging in the prohibited
conduct and to being barred from seeking to modify or terminate the consent decree or enforce-
ment order for three years.114
Conclusion
The enforcement actions and principles discussed above illustrate the importance of comply-
ing with merger consent decrees and the significant civil and criminal penalties that companies
can face when they fail to do so. As noted above, the DOJ and FTC have consistently stressed the
importance of compliance with their consent decrees and the DOJ has recently implemented
various initiatives – which the FTC may ultimately follow – that are specifically designed to
increase its ability to successfully prosecute companies that violate their consent decree obli-
gations. In addition to increasing the likelihood that the DOJ (and potentially FTC) will bring
a greater number of formal decree enforcement actions in the coming years, these initiatives
significantly expand the costs and penalties that could be imposed on companies found to have
violated a merger consent decree, including a lengthy extension of the decree’s term and the
need to reimburse the DOJ for all of its investigatory and litigation expenses. Accordingly, merg-
ing parties must carefully consider and negotiate any obligations imposed on them by a DOJ or
FTC consent decree, as well as confirm that they can fully comply with these obligations within
the agreed upon time frame, before entering into these decrees.
113 Id. at 2.
114 Id. at 3.
154

PART V
REMEDY
NEGOTIATIONS:
PRACTICAL
CONSIDERATIONS

13
Negotiating Remedies: A Perspective from the Agencies
Daniel P Ducore1
Overall approach to negotiating with the agency

It is frequently stated that every merger case turns on its particular facts, and that is perhaps
doubly true for merger remedies. Nevertheless, the US Department of Justice (DOJ) and the
Federal Trade Commission (FTC) approach the process in a regularised way. Any successful
remedy discussion requires the parties – the merging parties and possible divestiture buyers
– to understand that process: how the staff is analysing the case, what remedy they are looking
for, and why and how the overarching need to minimise the risk of failure will drive much of the
decision-making. These are the subjects of this chapter.
The agencies enter all settlement discussions with a broad goal: to fully restore or maintain
the competition that the merger would eliminate.2 Unless the agency can conclude that a rem-
edy will fully maintain competition, it will likely reject the proposal and challenge the merger.3
The agency will resist partial solutions.
1 Daniel P Ducore is the former assistant director of the Compliance Division of the US Federal Trade
Commission’s Bureau of Competition.
2 FTC, The FTC’s Merger Remedies 2006–2012, www.ftc.gov/system/files/documents/reports/ftcs-merger-
remedies-2006-2012-report-bureaus-competition-economics/p143100_ftc_merger_remedies_2006-2012.
pdf (2017, ‘FTC Merger Remedies Report’) at 1. See also, DOJ, Antitrust Division Policy Guide to Merger
Remedies, www.justice.gov/sites/default/files/atr/legacy/2011/06/17/272350.pdf (2011, ‘DOJ Merger
Remedies Guide’) at 2, ‘preserve competition in the relevant market’. In particular, the FTC Merger
Remedies Report includes a final Section VII on best practices, which highlights critical points that all
parties should understand when discussing merger remedies.
3 The agencies consider remedies only if they conclude the merger would be unlawful. ‘[D]ecrees
have become so common that one might forget they arise from a conclusion that a transaction was
illegal under Section 7 of the Clayton Act. The complaints brought alongside such challenges should
not be ignored, however – they reflect a conclusion by the Antitrust Division that a transaction
broke the law.’ ‘Remarks of Assistant Attorney General Makan Delrahim Delivered at the New York
State Bar Association’, 25 January 2018, available at www.justice.gov/opa/speech/remarks-assistan
t-attorney-general-makan-delrahim-delivered-new-york-state-bar. Both agencies view merger
settlements through that law enforcement lens. Further, the complaints explain the specific markets
157

The parties, therefore, must start with a clear understanding of the antitrust case as the
agency staff perceives it. By the time parties begin settlement talks, they should understand
how the agency views the markets and overlaps and the theory of competitive harm. If the par-
ties have any doubts about that, they should ask. The agency staff will almost always discuss
its concerns. In any event, if the parties are unclear about the agency’s view, discussions will
quickly identify areas of disagreement. The parties should show how their proposed remedy
will solve the problems raised by the merger.4
For horizontal mergers, both agencies have emphasised a strong preference for a complete
divestiture of overlapping assets. As often explained,5 a complete divestiture is the cleanest way
to quickly create a robust competitor to compete with the merged firm.6 The divestiture should
transfer the current (and expected future) market share and competitive presence of one of the
merging firms to a new firm.7 Although the parties may continue discussing the substantive
case, extended discussion over why something less than one side’s market presence should
be divested will delay settlement. Reaching agreement with the agency on this point usually
focuses the rest of the discussions on the particulars of which assets and businesses must be
divested and how.
Separately, however, the parties must also have a solid understanding of the businesses
involved in the merger: how (and where) the products are made; other products that may also be
made at the same location; 8 what critical inputs are needed (and where they come from); the role
of any sales organisation; supplier and customer relationships; and the importance of research
and development. A successful divestiture is one where the buyer obtains (or already has) all
the pieces that are critical to the success of the business operation. Settlement discussions can
be delayed if information needed to design a successful divestiture is not readily available to the
parties or their counsel.9 A complete understanding of both the relevant markets and the ways
those markets operate will allow the parties and agency staff to agree on what must be divested.
and analysis that support the agencies’ conclusions that the merger would be unlawful. And, the FTC’s
settlements affirm that the complaint can be used to interpret the order.
4 At the FTC, the Bureau of Competition’s Compliance Division will be closely involved in any
discussions. Compliance Division attorneys will become part of the investigating team as soon as a
settlement appears possible. At DOJ, the investigating staff will coordinate its settlement work through
the office of the Director of Civil Enforcement.
5 See ‘Assistant Attorney General Makan Delrahim Delivers Keynote Address at American Bar
Association’s Antitrust Fall Forum’, 16 November 2017, available at www.justice.gov/opa/speech/
assistant-attorney-general-makan-delrahim-delivers-keynote-address-american-bar. The FTC has
published other guides, available at www.ftc.gov/enforcement/merger-review (‘Negotiating Merger
Remedies’ and ‘FAQs on Remedies’). Clearly, and especially for horizontal mergers, a structural remedy –
divestiture – will be required.
6 ‘The most effective and complete form of a divestiture is the sale or spin-off of an ongoing or
stand-alone business that will create an independent competitor to the merging companies.’ ‘Deputy
Assistant Attorney General Barry Nigro Delivers Remarks at the Annual Antitrust Law Leaders Forum
in Miami, Florida’, 2 February 2018, available at www.justice.gov/opa/speech/deputy-assistant-attorney-
general-barry-nigro-delivers-remarks-annual-antitrust-law.
7 Exactly how the parties will divest the complete overlap is discussed later.
8 Scale and scope economies may require a divestiture of more than simply the overlap products
or services.
9 Counsel should not resist staff’s requests for this needed information, yet there have been cases where
such resistance significantly delayed settlement.
158

The agency will assess any proposal by how well it will achieve the agency’s goal. That
assessment will focus on three categories of risk to a successful remedy. The first risk is that the
divested assets will fail to maintain competition because they are insufficient to create a robust
competitor. This ‘asset risk’ is heightened when the proposed divestiture excludes assets, con-
tracts or other arrangements that are important to the competing business’s success (even
though outside the relevant antitrust market). Accordingly, the agency will strongly prefer a
divestiture of ‘an ongoing business’.10
The second risk is that the buyer will fail to compete successfully with the divested assets,
because the buyer lacks other critical assets, or financial or management resources. ‘Buyer risk’
increases as less than a full business is divested. Although both agencies will insist on doing
full due diligence on any buyer, and will assure the buyer conducts its own diligence, buyer risk
cannot be fully eliminated. The agency will seek to minimise that risk, and will not accept a
proposed remedy if it believes the risk is unacceptably high.
The third risk, which has recently been receiving more attention, is ‘implementation risk’.
Even if the divestiture business is robust and the agency is satisfied that the proposed buyer
has the financial and business capacity to take the divested business and compete successfully,
the transfer may nonetheless fail for unanticipated reasons, and the buyer may not become an
effective competitor. The agencies now consider the actual mechanics of the divestiture in more
detail, and, as with the other risks, will not accept a proposed remedy if the implementation risk
is unacceptably high.
These three risks are interrelated. A ‘complete business’ divestiture will reduce the risk that
a buyer will fail to obtain all needed assets and relationships, and will greatly reduce the risk
that the divestiture itself will not proceed smoothly. Similarly, a buyer that fully understands
the markets, has deep financial resources and has developed a robust business plan (after con-
ducting full due diligence) will reduce the risk that the asset package may have failed to include
some important piece. Finally, a proposal to divest a complete business to a well-prepared and
well-financed buyer will reduce implementation risk. By understanding these risks, parties will
be better able to offer an acceptable remedy. Parties that explain how their proposal addresses
and minimises these risks are more likely to reach an expedited settlement agreement.
Parties must also decide when they will begin settlement discussions. It is generally bet-
ter to begin discussions as soon as possible. At the same time, serious discussions cannot pro-
ceed before the agency has determined where the competitive problems lie. Parties should not
attempt to reach a quick settlement in one market in the hope that the staff does not identify
a competitive problem in another. If an additional market problem is identified late in discus-
sions, the staff will insist that it be remedied, along with the previously identified problems.
That is likely to delay reaching an agreement. A complete settlement is therefore most likely to
happen sooner if the parties engage with the staff as soon as there is agreement on the markets
that need to be addressed.
The parties must also fully understand their own goals when entering negotiations.
Whether deal timing, the scope of any required divestitures, or other factors are most impor-
tant, parties should be clear about what they are trying to achieve. They must understand how
their positions may conflict with the agency’s goals and cause delay.
10 The FTC’s Merger Remedies Report noted that all of the divestitures of ‘ongoing businesses’ succeeded,
while some of the less-than-all divestitures failed – even when divested to upfront buyers.
159

Finally, parties will need to decide what they will and will not continue to debate. The par-
ties often disagree with staff on some or even all markets. In matters involving multiple prod-
ucts, further investigation may lead staff to drop markets from its concern, and the parties may
continue to urge the staff to drop others. At some point, however, it will become clear that the
parties and staff may have to ‘agree to disagree’ in order to reach a settlement.
Timing concerns and decisions

Almost every merger raises issues about timing – it is rare that the parties are truly neutral
about when their deal can close. Factors that drive the parties’ concerns can include financing
arrangements (and expiring lending commitments), required shareholder votes, deal termina-
tion contract provisions, seasonality in certain markets, and, not least, the presence of compet-
ing bidders for the firm being acquired. Most importantly, the parties should be planning their
work backwards from any critical dates, with a full understanding of what the agency’s staff
needs to do, what issues are being addressed and how the interests of other parties (including
potential buyers for divested assets) will affect the process.
Not all deadlines are equally important. In particular, staff will likely give more weight to
third-party obligations and commitments than to simple wishes to close by a particular date.
For example, the parties may have a general desire to close their merger by the end of a par-
ticular month, or before the start of a period of high demand.11 These dates are important to
the parties, but they are likely less immutable than the end of lender financing (when interest
costs may need to be renegotiated). The parties should be aware of all their timing concerns and
plan accordingly.
The staff will try to expedite its investigation, and will understand that the parties want
their deal to close as soon as possible. Nevertheless, the parties should not assume that the staff
will know how any third-party timing drives the process. The parties must alert staff early to
those critical timing issues. Waiting until late in the process to alert staff that ‘financing will run
out in three weeks’ will almost always be counterproductive. The staff will not shortcut its own
process to allow the parties to meet a critical date that should have been revealed much sooner.
Parties should also be prepared to document their timing concerns, especially if they are
asking the staff and decision-makers to expedite internal processes. They should produce doc-
uments showing, inter alia, where the financing provisions contain terminations, and how a
jurisdiction’s corporate and securities laws require action by a certain date. Staff may question
how firm a deal deadline is. Although those deadlines may give one of the parties the opportu-
nity to abandon the deal, it is important to know how real that concern is. Staff will not ignore
these arguments, but none of them can be assumed to be dispositive.12
Throughout the process, parties may continue to discuss the antitrust merits with the staff
to try to carve markets out of the case. Parties may also suggest that they may not settle, requir-
ing the staff to continue its work towards a possible court challenge. The parties should under-
stand that those efforts will take time away from the staff ’s work to design the remedy, review
11 In some retailing industries, peak demand is in the last quarter of the calendar year, and most firms
want to avoid major transition efforts and store conversions while shoppers are filling their stores.
Similarly, some industries have regular contracting cycles, and the agencies and parties both will likely
want to avoid a disruptive business transfer during that peak period.
12 Staff will insist that the buyer have the time needed to conduct its own due diligence review.
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proposed buyers and draft the settlement papers.13 As a practical matter, staff will not focus fully
on the underlying case (and, especially, prepare for a court challenge) and simultaneously con-
duct all the work needed to design a good remedy.
Timing for a merger subject to the HSR Act is often covered by a timing agreement14 between
the parties and the agency’s staff. Parties agree not to certify compliance with the second
request without giving advance notice to the staff.15 Such agreements allow all parties to focus
on settlement discussions and other aspects of the investigation, and not immediately on a pos-
sible court challenge. If the parties either certify or announce their ending of the timing agree-
ment, however, the staff will very likely stop discussing settlement and turn its full attention
to preparing the case for challenge in federal court. Staff will not jeopardise its litigation posi-
tion by diverting trial-preparation resources to settlement discussions as the deadline for filing
their complaint approaches.16
Finally, the particular details about the proposed remedy can affect the timing of settlement
– the assets proposed for divestiture can affect both the likely buyers and the time needed for
review. For example, it is generally easier, and likely quicker, to be prepared to divest an entire
business that contains the overlap products than it is to divest a select group of assets (a carve
out). However, parties sometimes prefer to divest the select assets, generally because it is a
smaller overall package. As discussed in other chapters, both agencies will likely require an
upfront buyer for those assets, and selection of that buyer and staff ’s review will take longer
than review of a ‘going concern’ divestiture would.17 In addition, the particular asset package
may be acceptable only in the hands of a very few approvable buyers. Parties need to under-
stand the trade-off between the divestiture proposal and the time needed to review it.18
All else being equal (which is often not the case), staff generally does not have a preference
for whether the parties divest the acquirer’s assets (A-side) or the target’s (B-side). In most cases
the parties prefer to divest the smaller of the overlap products. But staff will likely resist a dives-
titure that raises risks about the package, the proposed buyer or implementation of the remedy
13 For a general discussion of the different documents used to settle a matter at the FTC and DOJ, See, A
Visitor’s Guide to Navigating US/EU Merger Remedies, 12 Competition Law Internat’l No. 1, 85, April 2016,
especially at 87–88; available at www.justice.gov/atr/file/883616/download.
14 The FTC and DOJ have each recently published model timing agreements. See FTC, Bureau of
Competition, www.ftc.gov/system/files/attachments/merger-review/ftc_model_timing_agreement_
2-27-19_0.pdf (February 2019); and Antitrust Division, www.justice.gov/atr/page/file/1111336/download
(November 2018).
15 Where parties have certified, they may agree not to move forward on the merger until they have given
the agency advance notice, often 60 days or more.
16 Parties may propose a settlement late in an investigation, where staff is preparing its case for a
challenge. They should be prepared at that point either to enter or extend a timing agreement.
17 While staff conducts its due diligence, it will expect the buyer to complete full due diligence as well.
Parties can expedite that process by making sure the buyer has direct access to the documents and
information needed to review the proposal. See FTC Merger Remedies Report at VII.C.1 (Implementing
the Remedy, Due Diligence).
18 In some cases, the divestiture may be workable only in the hands of a single buyer. If that buyer comes to
believe that it is, indeed, the only acceptable one, it may press the parties for a low divestiture price. The
staff is unlikely to be sympathetic to the parties’ concerns that the proposed buyer is taking advantage
of that situation, because they could decide to divest the other overlapping product if they choose.
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if the alternative divestiture can be ‘clean’.19 That trade-off raises many issues beyond timing
alone, but the parties should understand that straightforward remedies can be resolved, docu-
mented and completed more quickly.
Divestiture buyers and the policy choices

Discussions over the scope of divestiture can often be the most difficult aspect of a settlement.
Selection of an upfront buyer that is acceptable to the agency is often only slightly less fraught.
The two are closely related – when the agency requires an upfront buyer it is precisely because
the agency insists that the parties must support their particular divestiture proposal by show-
ing that a particular buyer is both interested and capable of successfully competing with what
it will be buying.20
The parties’ choice of a divestiture buyer will always raise a number of basic issues that the
staff must investigate. This section discusses what the parties should consider when proposing
a buyer as part of settlement – the ‘upfront buyer’. The agency will require the same informa-
tion, and conduct the same analysis as it would for a divestiture after the remedy is final, but the
dynamics of overall settlement discussions will raise additional issues.21
Any proposed buyer must be able to take the divested assets and succeed with them, meet-
ing the stated goal of ‘maintaining or restoring competition in the relevant market’.22 The par-
ties, with the proposed buyer’s help, must therefore show that their proposal will meet that goal.
The agency’s demands can best be considered by referring to the three broad risks already dis-
cussed: (1) whether the proposed divestiture assets will give the proposed buyer what it needs to
compete successfully; (2) whether the proposed buyer has the financial and management abil-
ity to take those assets and compete; and (3) whether the proposed buyer has a well-prepared
plan for taking the assets and integrating them into its existing business operations.
The merging parties have the burden of showing that their proposal should be accepted –
this obligation covers all aspects of the showing, although some information will necessarily
come directly from the proposed buyer.23 The information needed to show that the assets are
an acceptable package is fairly straightforward and will flow directly from the relevant market
19 This chapter does not address broader question of when a mix of both A-side and B-side assets may go
into a divestiture package.
20 The agencies do not have a fixed requirement that the parties make the opening proposal (unlike the
EC and some other jurisdictions). As a practical matter, however, once the parties understand the staff ’s
concerns, they will be expected to offer a solution. As noted earlier, any offer must fully address the
antitrust concerns identified by the staff.
21 For divestitures that occur after the remedy is final, the FTC’s Rules of Practice set out the procedure
for the parties (the respondents under the final order) to make an application for FTC approval: if
the Commission rejects an approval application, the parties may challenge that decision in federal
court but must show that the Commission’s decision, based on the record made by the parties in their
application, was arbitrary or capricious. This standard of review makes clear that the respondents
have the burden to show their application should be approved. See, Dr Pepper/Seven Up Cos Inc v. FTC,
991 F.2d 859 (DC Cir 1993). DOJ conducts a similar substantive analysis; its decrees require defendant’s
proposals to satisfy DOJ in its ‘sole discretion’.
22 FTC Merger Remedies Report at 1; VII.B.. See also DOJ Merger Remedies Guide, at 1.
23 The agency staff will make clear that it does not want the parties to be privy to the buyer’s confidential
financial, business, and other plans and information, but the parties will need to make sure the
buyer provides that information to the staff. See also, FTC Bureau of Competition staff, ‘A Guide for
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analysis of the investigation. The parties should keep in mind, however, that assets that are out-
side the precise antitrust market may need to be divested to create a viable business. These may
include assets needed to provide critical inputs (speciality products); research and development
assets; contractual relationships with suppliers, distributors or customers; and a sales force.24
The parties’ willingness to divest more – making a true ongoing business – will better assure
that a proposed buyer has all assets needed to succeed.
The greatest focus will often be on the particular buyer’s own assets, business plans and
financial wherewithal. The parties should have a good basic understanding of the proposed
buyer, and should understand that the staff will expect them to explain why they chose that
buyer and why they believe it will succeed. The staff will then turn its attention to the proposed
buyer itself, and will likely request information that the parties themselves do not have. Review
of the buyer will move more quickly if the parties have fully explained that process to the buyer
and explained why the buyer will need to provide further information to the agency.25
The agency’s staff will examine three main areas of the buyer’s capability by reviewing doc-
uments, and meeting with and interviewing the buyer’s most knowledgeable employees. First,
staff will ask the buyer to explain its own market position and relationship to the relevant mar-
kets in the case. The buyer may be involved in a related business, or may be a competitor in a
geographic market not implicated by the proposed merger. Staff will expect the buyer to explain
its plans for taking the divested assets, integrating them into its own operations, expanding
its business and becoming competitive with the parties.26 Depending on the particular matter,
those plans may need to address, for example, expanding production capacity at an existing
plant (if acquiring particular manufacturing assets), or increasing and expanding the buyer’s
existing sales force. Buyers often present their case by bringing the relevant personnel (eg, sales
managers and production supervisors) and by offering well-drafted plans to the staff, over the
course of one or several interview sessions.27
Respondents: What to Expect During the Divestiture Process’, June 2019, www.ftc.gov/system/files/
attachments/merger-review/a_guide_for_respondents.pdf.
24 See the settlement in DOJ’s challenge to the merger of Bayer AG and Monsanto Co, www.justice.gov/atr/
case/us-v-bayer-ag-and-monsanto-company (2018). That divestiture settlement includes assets outside
the alleged product markets, and broadly covers research and development assets, employees, and
contractual arrangements in the industry.
25 This is generally not an issue. Yet, some smaller businesses do not always fully understand what the
staff needs, and the parties’ failure to prepare the buyer for the staff ’s review may delay settlement.
26 See FTC Bureau of Competition staff, ‘A Guide for Potential Buyers: What to Expect During the Divestiture
Process’, June 2019, www.ftc.gov/system/files/attachments/merger-review/a_guide_for_potential_
buyers.pdf. The parties and buyer should recognise that it may not be enough to show that the buyer will
succeed and be profitable. The agency is looking for a competitive remedy. That is, what is good for the
buyer must also offer robust competition in the affected markets. Although circumstances are rare, the
agencies have rejected proposed buyers who likely would have succeeded financially, but who would not
have met the broad goals of relief – to restore or maintain the competition (in all affected markets) that
the proposed merger would lessen. The divestiture must also not create new antitrust problems in any
market. See, West Texas Transmission LP v. Enron Corp et al, 1989-1 Trade Cases (CCH) paras. 68,424 at
60,334 (WD Texas 1988), aff’d on other grounds 907 F.2d 1554 (5th Cir 1990), cert denied 499 US 906 (1991).
27 The staff may also talk to major customers in the affected markets. Staff will be sensitive to the parties’
desire to keep the buyer’s identity confidential, but as a practical matter it may become necessary for the
parties to disclose the status of their negotiations so customers are aware.
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The proposed buyer must also show that it has a well-capitalised financial plan: capital to
make the divestiture purchase and to fund integration, and a willingness to pursue expansion
efforts over the time needed to become fully established. If the buyer is relying on third-party
financing, it will need to provide documentation to show the terms of that financing, and how it
would deal with any contingencies.
The proposed buyer may need to provide financial projections, including the assumptions
used, to show its anticipated performance over the early years after divestiture. The details will
depend on the industry, the assets and the buyer. The agency will conduct its own review of
those arrangements, and may raise detailed questions about financial projections and espe-
cially the assumptions used.28 The staff may request any documentation that the proposed
buyer used to obtain outside financing or high-level corporate authorisation to buy the assets.29
This documentation should explain how the buyer sees its opportunity and risk, including how
its position may change if assumptions do not bear out.
As with most issues involving merger review, the specific areas for analysis and the degree
to which they are critical will vary with the case. The agency’s review will take time, and it is best
to address these issues as soon as a potential buyer is identified. Questions that arise towards
the end of the process will undoubtedly cause delay.
The agencies have long made clear that if the parties advocate for a divestiture of less than
an ongoing business, they will almost certainly have to propose a particular buyer. As the size of
the offered package diminishes, the need for a close and thorough review of the buyer increases.
Conversely, in cases where parties are willing to divest a complete business covering the affected
markets (i.e., entire production facilities, with inputs, suppliers and customer contracts, and a
complete production and marketing workforce) the agencies will be more willing to allow that
divestiture to occur after the settlement and after the merger is consummated. In those cases,
nevertheless, the staff will expect the parties to show that there are approvable firms available to
buy the divested assets.30 The difference is in the level of review that the agency will undertake
during settlement. For upfront buyers, the staff will insist upon seeing the final negotiated dives-
titure contracts, financing arrangements and business plans. For post-order divestitures, the
agency will expect those documents and arrangements to be presented when the merged firm
makes its request for agency approval of the proposed divestiture.31 The effort and time needed
during settlement is greater for upfront buyers, but the parties will need to make some initial
showing of likely interested and approvable buyers even for a post-order divestiture plan.32
A remedy requiring divestiture of a complete business will likely require the parties to
enter some interim arrangement to hold the to-be-divested business separate from the merged
firm pending divestiture and to maintain their competitive vigour. The agencies have used
28 The staff may ask about the sensitivity of the buyer’s projections to changes in assumptions, such as
sales projections, cost estimates, etc. A projection that is closely dependent on those assumptions not
varying may be more risky than one with a larger margin for error.
29 For example, presentations to the board of directors.
30 The parties’ general assurances that firms are interested will usually not be sufficient. Depending on
the circumstances, the staff may need to talk to those firms to assess their interest and ability.
31 The agencies generally require any post-remedy divestiture to be completed within four to six months
from settlement.
32 Staff will reach out to these possible post-remedy buyers to gauge their interest and to learn if the
remedy is insufficient for some reason.
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hold separate and asset-maintenance agreements and orders for many years, and the terms
are very similar from case to case. A review of the agencies’ public record will show the general
approach. Parties should plan accordingly and should be prepared to establish an acceptable
arrangement. The agencies will also likely require appointment of a third-party monitor, who
will oversee the held separate arrangement, report to the agency, and otherwise help minimise
any problems that may arise in the interim.33 As with other terms, engaging early with the staff
about the hold separate and any needed monitor will help avoid delay.34
Other standard provisions and party obligations

Most merger settlements contain a number of standard provisions with which the parties
should become familiar. For divestitures that raise potentially difficult technical issues (such
as the transfer of complex intellectual property), whether to an upfront buyer or in a later
post-decree divestiture, the agency may require a transition services agreement between the
merging parties and the buyer, to assure that the merged firm does what it must to ensure the
buyer receives the needed information. Further, as noted in the FTC Merger Remedies Report,
transfer of certain ‘back office’ functions from the parties to the buyer has at times been more
difficult than anticipated.35 Accordingly, the agency may require that transfer function to be
memorialised in an additional agreement between the parties and the buyer (it may be a part of
any transition services agreement). Just as for hold separates, a monitor will likely be required
to oversee that process.
Similarly, if the buyer will need an interim supply of a critical input while it completes its
own alternative arrangements, the parties may need to negotiate and enter a supply agreement,
again likely overseen by the same monitor. The supply agreement will specify the terms of that
obligation, including volumes, pricing and delivery details. Such an agreement will need to run
long enough to allow the buyer to separate seamlessly from the parties, but not so long as to cre-
ate a long-term dependency – generally 18 to 24 months, depending on the case.
33 See, e.g., DOJ Merger Remedies Guide at 26. The two agencies have issued many decrees and orders
providing for monitors. The terms of those agreements track the remedy’s requirements and are usually
public, although the compensation schedule is confidential. Although monitors are formally appointed
or named by the agency, the parties are encouraged to propose candidates, for several reasons. First,
the parties may be best able to identify individuals (or firms) that have the precise industry experience
needed to meet their obligations. Second, because of the necessary ongoing relationship between the
monitor and the parties (as well as the agency), the parties’ identification of a candidate they believe
can work well is more likely to lead to a problem-free process. The agency will, however, fully review
any proposed candidate, for both expertise and possible financial or other conflicts, and may request
the parties to select an alternative. Once appointed, the monitor owes its duties to the agency’s remedy,
not to the parties (who must pay the monitor), and the monitor will report formally to the agency on a
regular basis, and more often on an informal basis.
34 The FTC and DOJ do not conduct a formal ‘market test’ of the divestiture proposal, unlike some other
jurisdictions, most notably the European Commission. But the US agencies will (consistent with
confidentiality restrictions) reach out to major customers (as noted earlier) and other knowledgeable
parties to assess their views of a potential divestiture and buyer. The goal is the same as for the EC’s
market test: to determine if there are issues or problems that need to be considered before agreeing to
the proposed remedy.
35 FTC Merger Remedies Report, at VII.A.2.
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The agencies’ final settlement documents also contain routine reporting and access
provisions, and examples of all of these36 can be found by a simple review of any recent
merger settlement.37
Final timing and the agency’s schedule

The agencies have a general working rule for how much time is needed to review and approve
the settlement before the underlying merger can proceed. At the FTC, the Bureau of Competition
generally requires two weeks to review the final arrangements and the commissioners generally
require two weeks to review the settlement. At the DOJ, time must be allowed for final review by
the Assistant Attorney General. These time periods are often shortened for contingencies, but
the parties should anticipate building in enough lead time to their discussions.
At the FTC, it is not necessary that the parties meet with commissioners, or senior manage-
ment in the Bureau of Competition, and the parties should discuss with staff whether they need
to seek meetings before they arrange them. Senior leadership will already be aware of the mat-
ter (and will have approved the settlement before the staff reaches final terms), and it is gener-
ally unnecessary to seek a meeting if the staff has not indicated one is needed. Similarly, unless
a commissioner’s office has raised an issue it wants addressed, or has identified other problems
or concerns, there is no need to schedule those meetings. The staff will alert the parties if an
issue arises that would be best dealt with at such a meeting. At the DOJ, parties should take their
cue from the staff concerning the need to meet with the Antitrust Division’s leadership.
36 For an FTC order requiring an upfront buyer, and containing an asset maintenance provision, see
Becton Dickinson and Co, www.ftc.gov/enforcement/cases-proceedings/171-0140/becton-dickinson-
company-cr-bard-inc-matter (2018). See also CRH plc, www.ftc.gov/enforcement/cases-proceedings/
171-0230-c-4653/crh-plc (2018).
37 This discussion has been in the context of the most common settlement, made during the merger
investigation itself and completed before the merger proceeds. Two other situations are possible: (1)
the merger has already occurred (likely because it was not subject to the HSR Act), and (2) the agency
is already in litigation with the parties. The procedures are different for mergers that have been
consummated, but the substantive issues that the agency will address are the same. Timing issues
may differ, because the parties have already completed their transaction, but the agencies will not
likely allow the investigation to slow without real progress towards a remedy. Instead, the agency
will move its investigation towards a challenge (an administrative trial at the FTC, or a district court
complaint brought by the DOJ). In the case of administrative litigation at the FTC, certain ex parte rules
prohibit unilateral communications between the FTC’s staff (‘complaint counsel’) or the parties and the
commissioners, but if a settlement is reached with staff, the matter will be removed from adjudication,
at which point the staff, and parties, may communicate directly with commissioners (and their own
staff). Whether before the FTC or in federal court, settlement discussions can proceed during trial
preparation, but the staff will not be distracted from trial preparation (including depositions), and they
will require real progress towards settlement before agreeing to any delays. The parties are therefore
best served if they conduct settlement discussions as they would in a pre-merger investigation, focusing
on the merits and being mindful that a failure to settle will move the case closer to trial. Similarly, cases
can be settled during litigation over a preliminary injunction. Timing limitations may be severe, but the
substantive issues about what should be divested, and how and to whom will be similar.
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Parties’ obligations after settlement

After the settlement is complete and approved by the agency or filed with the court, the parties
must remain attentive to their ongoing obligations. The upfront divestiture should be completed
expeditiously, supply deliveries should begin as scheduled, and technology transfers should be
completed cooperatively. The parties should address any questions raised by the monitor as
soon as they can. As with all remedy compliance, it is better to bring issues to the agency’s atten-
tion quickly so they can be resolved, and not allow small concerns to become major problems.38
Ongoing communication by all parties with the staff is always advised.39 The parties will need
to file any required compliance reports on time, including a full description of their compliance
with the remedy’s terms, and they should understand that continuing oversight of their compli-
ance will be a regular part of the agency’s work during the relevant terms of the remedy.
38 The Antitrust Division now includes certain ‘fee shifting’ provisions in its decrees, requiring the
defendant parties to bear the costs (including DOJ attorney fees and expert fees) of any prosecution of
a decree violation. ‘Remarks of Assistant Attorney General Makan Delrahim Delivered at the New York
State Bar Association’, 25 January 2018.
39 FTC Merger Remedies Report, VII.E. Failure to comply with the terms of a remedy, including the
divestiture deadline, may subject the parties to financial penalties and other consequences. The FTC
may seek civil penalties and other relief, pursuant to Section 5(l) of the FTC Act, 15 U.S.C. §45(l); the DOJ
may seek contempt remedies from the court that issued the decree.
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14
Negotiating the Remedy: A Practitioner’s Perspective
Francisco Enrique González-Díaz, Daniel P Culley and Julia Blanco1
Remedies are a key part of the merger control planning process. While it is up to the parties to
propose and implement remedies, their exact form and scope are generally the subject matter
of intense negotiations with competition authorities and sometimes between the parties to the
transaction. Using several actual transactions as a reference, this chapter focuses on how best
to conduct these negotiations from a practitioner’s perspective.
The best remedy planning starts early in a transaction, with deep client involvement.
Identifying the most likely competitive concerns, the transaction rationale and efficiencies may
not be enough on its own, because remedies may need to be broader than the actual competi-
tion concern to pass muster. For example, only one product within a group of three may raise
competitive concerns, but the three products may share research and development resources,
production facilities or a sales force. Thus, divesting that product alone may only enable a
higher-cost competitor and therefore not sufficiently constrain the merged entity’s competi-
tive behaviour. An appropriate remedy planning process must identify issues like these and
propose solutions such as finding buyers that have other, similar products that might share the
research and development and sales efforts, or divesting a broader group of products.
We will consider the key aspects of a proper remedy strategy: (1) the remedy plan-
ning process; (2) trade-offs in the divestiture process; (3) conducting the sale process; and
(4) when and how to approach the authorities. We then address some special issues that arise in
multi-jurisdictional transactions.
1 Francisco Enrique González-Díaz and Daniel P Culley are partners and Julia Blanco is an associate at
Cleary Gottlieb Steen & Hamilton LLP. The authors would like to thank Niklas Maydell and Katia Colitti
for their contributions, and Virginia Romero Algarra for her invaluable assistance in preparing an
earlier version of this chapter.
168
The remedy planning process

Remedy planning involves: (1) identifying the likely competitive concerns; (2) identifying what
remedies can address those issues given the antitrust authorities’ legal standards, the rationale
for the transaction and its efficiencies; and (3) deciding what remedies to offer and when to do
so, taking into account, if appropriate, the need to coordinate remedies across multiple jurisdic-
tions. This process should always start as early as possible.
As discussed in detail in other chapters, the type of acceptable remedies will vary depend-
ing on the nature of the competition concerns – for example, horizontal versus vertical or con-
glomerate – and sometimes on the antitrust authority reviewing the transaction. In most cases,
and particularly in horizontal mergers, only a structural remedy such as a divestiture will be
acceptable. For example, the Commission notice on remedies states ‘[structural] commitments,
such as the commitment to sell a business unit, are, as a rule, preferable’.2 But not even all dives-
titures are created alike, as the authorities may also have a strong preference for the divesti-
ture of a stand-alone business. For example, the US Department of Justice’s Guide to Merger
Remedies notes that ‘the general preference is for the divestiture of an existing business.’3
Practitioners should also be aware that novel theories of harm may impact the types of
assets that need to be included in a divestiture package. If the relevant authority has identi-
fied competitive concerns relating to innovation, for example – as is not uncommon in the
Commission’s recent practice – remedies must address those innovation concerns as well.
For example, in Abbott Laboratories/St Jude Medical,4 the Commission raised concerns
about vessel closure devices (VCDs) (devices used to close vessels after minimally invasive
cardiovascular surgery) and transseptal sheaths used in electrophysiology procedures, which
test the electrical activity of the heart to find the source of arrhythmia (abnormal heartbeat).
As to the latter, the Commission was concerned that the combined firm would no longer have
the incentive to launch Vado, a new transseptal sheath developed by a unit of Abbott to chal-
lenge St Jude Medical’s market-leading product. To resolve the Commission’s concerns, Abbott
committed to divesting not only St Jude Medical’s global VCD business, but also the Abbott
unit that developed Vado. This structure ensured that the purchaser of the divested business
would continue developing Vado and would eventually put it on the market to compete with the
merged entity.
In Dow/DuPont 5 the Commission also pursued a novel theory of harm related to innova-
tion. In this case, the Phase II remedies consisted of divesting a significant portion of DuPont’s
crop protection business and almost the entirety of DuPont’s research and development organi-
sation to a single buyer to remove both the price effects and the innovation effects identified
by the Commission. Similarly, in Bayer/Monsanto,6 to address similar innovation concerns, in
addition to requiring that the related research and development organisations go along with
the divested businesses (in vegetable seeds, and broadacre seeds and traits), the Commission
2 Commission notice on remedies acceptable under Council Regulation (EC) No. 139/2004 and under
Commission Regulation (EC) No. 802/2004, paragraph 15.
3 Antitrust Division Policy Guide to Merger Remedies of the US Department of Justice, June 2011.
4 Abbott Laboratories/St Jude Medical (COMP/M.8060) Commission Decision of 23 November 2016.
5 Dow/DuPont (COMP/M.7932) Commission Decision of 27 March 2017.
6 Bayer/Monsanto (COMP/M.8084) Commission Decision of 21 March 2018.
169

also required the divestiture to BASF of Bayer’s glufosinate assets and three important lines of
research for non-selective herbicides; and the commitment of Bayer to grant a licence to BASF
over its worldwide current offering and pipeline products on digital agriculture.7
Although antitrust authorities tend to be very sceptical of behavioural remedies, they do
accept them in certain circumstances. Imposing firewalls is one of the most common behav-
ioural remedies whenever the primary competitive concern is the misuse of competitively
sensitive information. In ASL/Arianespace,8 for example, where the concerns related to poten-
tial exchanges of sensitive information, the Commission accepted firewalls and some other
measures to restrict the mobility of employees between companies as well as an arbitration
mechanism to settle any disputes. Practitioners should thus seriously consider whether behav-
ioural remedies would be appropriate in any specific case. Non-discrimination provisions are
also a typical remedy for concerns about the degradation of interoperability. In Qualcomm/NXP
Semiconductors,9 for instance, the Commission accepted Qualcomm’s commitments to pro-
vide the same level of interoperability between its own baseband chipset and the products it
acquired from NXP with the corresponding products of other companies. In that same case, the
Commission also remedied certain concerns regarding intellectual property rights by requiring
Qualcomm to offer licences to certain technologies on certain terms and, more controversially,
to not acquire certain patents in the future.10
Behavioural remedies may also be paired with a structural remedy in certain circumstances
to enable the divestment of a narrower package of assets. For example, in HeidelbergCement/
Italcementi,11 the Commission approved the concentration after the parties agreed to divest the
entire business of Italcementi in Belgium to remove the immediate overlap between the parties,
but the Commission still had concerns that the long-term limestone supply in the region would
be insufficient. The parties addressed this concern using a novel incentive scheme in the sale
agreement to reassure the Commission that the purchaser would be interested in opening a
new quarry, thus boosting limestone supply in the region.
Another important issue to bear in mind when designing and negotiating the scope of the
divestiture package is the parties’ internal business documents. If the parties have debated
internally about the scope of assets that they might be willing to divest in a non-privileged
context, these documents will often be caught up in the review. The combination of the
Commission’s narrow view of the scope of legal professional privilege – which it asserts
excludes both in-house counsel and non-EU-qualified lawyers in many circumstances12 – and
the Commission’s increasing breadth of document requests may allow the Commission to
access internal documents that give hints about or simply spell out what assets or businesses
the companies would be willing to divest. Practitioners should thus take this into account so as
to ensure that they are not caught off guard in negotiating remedies.
7 The Commission subsequently approved the replacement of the commitment to grant a licence to its
entire global digital agriculture product portfolio and pipeline products with a divestiture of Bayer’s
global digital agriculture assets and products.
8 ASL/Arianespace (COMP/M.7724) Commission Decision of 20 July 2016.
9 Qualcomm/NXP Semiconductors (COMP/M.8306) Commission Decision of 18 January 2018.
10 Ibid., paragraph 969.
11 HeidelbergCement/Italcementi (COMP/M.7744) Commission Decision of 26 May 2016.
12 F E González-Díaz and P Stuart (2017) Legal professional privilege under EU law: current issues.
Competition Law & Policy Debate, 3(3), 56–65.
170

Finally, the remedy package’s design should account for how it will impact the transaction’s
rationale or efficiencies and discuss this openly with the relevant authorities as appropriate.
As will be discussed in more detail below, it is also important to be aware of the possibil-
ity of inter-agency cooperation in cases where the transaction is being reviewed in parallel in
multiple jurisdictions.
Trade-offs in building the divestiture package

The remedy planning process will inevitably also involve assessing and making trade-offs.
Clients who want to expedite the review process may have to offer more far-reaching remedies.
On the other hand, clients who want to limit the scope of the divestiture package to the mini-
mum necessary may have to be more flexible in terms of timing.
The divestiture package presented in HeidelbergCement/Italcementi, for example, may be
considered far-reaching. By agreeing to divest the entire business of Italcementi in Belgium,
the parties removed almost the entire overlap between the parties’ activities in the areas of con-
cern for the Commission. That allowed the Commission to conclude its review, subject to some
minor modifications of the remedies in Phase I.
A divestiture package offered to remedy concerns early in the investigation (e.g., in Phase
I in Europe, before complying with a Second Request in the US) must be clear-cut, because the
authority may not have had the benefit of a full investigation to understand the exact contours
of the competitive concerns. Similarly, if the parties are seeking a post-closing divestiture, then
a more comprehensive business may need to be divested: the authority will have to satisfy itself
that the assets can stand on their own and that there will be a sufficient number of suitable
purchasers, as it will not have the ability to examine the buyers’ ability to integrate the pack-
age into their existing assets in detail ahead of closing. Thus, practitioners should assess, on a
case-by-case basis, whether it is worth it for the parties, considering the strategic rationale of
the transaction and their timing goals, to risk offering a divestiture package that may turn out
to go beyond what would be strictly necessary to remove the competitive concerns at stake but
make sure that clearance is obtained in as short a period of time as possible.
One of the most significant risks with taking this route is, of course, that it might not work
out as planned. If the broad package that the parties have offered does not prove broad enough
in the eyes of third parties or the authority, the parties may still end up having to endure a
lengthy investigation. Yet the parties will have already signalled to the authority their willing-
ness to agree to the broad divestiture package. There may thus be circumstances where the par-
ties might have succeeded in offering a narrower package had they planned in the first instance
for a lengthy negotiation or investigation, but will end up with the broad package because they
revealed their negotiating position too early in the process. Thus, where timing is an overriding
goal, practitioners may consider advising clients to err on the side of offering a clear-cut viable
stand-alone business. There are, of course, instances where antitrust authorities will not insist
on the broader package even though the willingness to offer it has already been revealed, but it
is nonetheless not helpful to the parties’ negotiating position.
By contrast, the more time the authority has to understand the exact competitive issues
and study how the proposed package would interact with a proposed buyer’s existing assets, the
more likely a narrower package is likely to be accepted.
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Another trade-off that practitioners must consider is the scope of a divestiture and the level
of monitoring. For example, the parties might prefer a behavioural remedy to preserve the syn-
ergies of the deal, but they will almost certainly need to live with enduring ongoing compliance;
reporting to a monitoring trustee who has significant power to access their records, interview
their employees and show up to internal meetings; and potentially being subject to burden-
some investigations or binding arbitration in the event of disputes. In ASL/Arianespace, the
behavioural remedies described above were offered for a duration of 25 years. These remedies
will be monitored by a trustee ‘with extensive powers to verify that the firewalls and employ-
ment measures [were] implemented, including having full access to the parties’ documents,
personnel and facilities’13 throughout the 25-year period. The monitoring trustee is also entitled
to ‘request the expertise of [the European Space Agency] to assess the compliance of the par-
ties with the commitments’.14 In Broadcom Limited/Brocade Communications Systems,15 Brocade
agreed to establish a firewall to remedy the concerns of the US Federal Trade Commission
relating to Broadcom’s access, as a supplier of Cisco Systems Inc, to sensitive information of
Cisco – Brocade’s major competitor. To ensure compliance with this behavioural remedy, the US
Federal Trade Commission appointed a monitor for a period of five years, extendable by up to
five more years. The monitor agreement that was entered into conferred upon the monitor ‘all
the rights and powers necessary to permit the monitor to monitor the respondents’ compliance
with the terms of [the Federal Trade Commission’s] order’.16 In particular, the monitor would
have ‘full and complete access to respondents’ personnel, books, documents, records kept in
the ordinary course of business, facilities and technical information, and such other relevant
information as the monitor may reasonably request, related to respondents’ compliance with
its obligations under [the] order’.17
In Teva/Allergan Generics,18 in addition to a divestiture package, the parties offered some
behavioural remedies to address the Commission’s concerns regarding out-licensing. In par-
ticular, the parties agreed that Medis (a third-party supplier of Allergan) would maintain
out-licensing agreements with Aurobindo, the proposed purchaser for one of the divested busi-
nesses, on the same terms as before the concentration for four years, a period that was deemed
sufficient for Aurobindo to be able to start manufacturing the molecules concerned. Throughout
this period, Aurobindo would have the right to send reasoned requests to a monitoring trustee
should it believe that the parties were not complying with the remedy they had offered.
Similarly, divestitures of a narrow package of assets may involve lengthy transition services
or supply agreements that are subject to similar types of monitoring. By contrast, divestitures of
a broad package of assets typically involve only a brief period of transition services, after which
the client will be free from further government involvement. Practitioners should thus make
sure that clients have considered these ongoing costs before attempting to minimise the rem-
edy package for its own sake.
13 ASL/Arianespace (COMP/M.7724) Commission Decision of 20 July 2016, paragraph 677.

14 Ibid.
15 Broadcom Limited/Brocade Communications Systems (Case 171 0027) FTC Decision and Order of
17 August 2017.
16 Ibid., paragraph IV.C.
17 Ibid., paragraph IV.E.4.
18 Teva/Allergan Generics (COMP/M.7746) Commission Decision of 10 March 2016.
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Dealing with buyers: the three-way negotiation process

The parties must not only decide on a divestiture package but also plan and prepare for the sale
process for the divested business. This sale process is subject to a peculiar dynamic – it is not a
standard two-way negotiation between the seller of the divested business and a potential buyer.
In the context of a divestment remedy, the negotiation process also includes the authority.
The parties to the deal are free to agree on its terms and structure. However, the author-
ity will intervene in the negotiation process to make sure that the buyer receives everything it
may need to operate the divested business. The US Federal Trade Commission explains that ‘if
the proposed package of assets does not comprise a separate business unit that has operated
autonomously in the past, the staff is unlikely to recommend that the Commission accept such
a proposal until the parties show that the package includes all necessary components, or that
those components are otherwise available to a prospective buyer’.19 Negotiation efforts that suc-
ceed in striking a tough deal with the divestiture buyer may thus be unwound if they do not sur-
vive scrutiny from the authority. Particularly as the authority’s review of a buyer progresses, the
seller will lose bargaining power with regard to the buyer because the seller would encounter
significant timing difficulties in finding an alternative buyer.
Because of this dynamic, the sale process, as the other elements of the remedy planning pro-
cess, should start as early as possible. In some circumstances, the sale process can commence
even before the divestiture package has been completely defined. For example, if remedies
involve the divestment of a cement plant and most of its terminal network, it may be possible
to start the sale process once the parties have identified the cement plant that will be divested,
even if the inclusion of one terminal or another may still be in doubt. The pending issues on
the scope of the divestiture package can be negotiated with a smaller set of potential buyers at
a later stage of the bidding process. Practitioners can apply similar techniques when the assets
at issue are not likely to have a significant impact on key variables of negotiation such as price.
In Abbott Laboratories/St Jude Medical, Terumo, a Japanese company active in the manufac-
ture and supply of cardiovascular devices, was identified by the parties as a suitable purchaser
for the divested business. Given the tight deadlines, the parties had looked for a purchaser even
before proposing the divestment to the Commission. During the review of the case, Abbott, St
Jude Medical and Terumo preliminarily agreed on the terms under which Terumo would pur-
chase the divested businesses so as to avoid any undue delays in closing the transaction follow-
ing the approval of Terumo as a purchaser by the Commission, approximately one month after
the conditional clearance decision.
An early start is not without risk, however. For example, information about the sale process
may be leaked. Initiating the sale process at a stage where the parties are still trying to convince
the authority that no remedies are necessary, for example, may suggest that those arguments
lack credibility.
Where the package would support a post-closing divestiture, practitioners should consider
enduring the additional investigative burdens to get the authority’s permission to do so, even
if there is already an identified purchaser. A upfront buyer requirement stops the parties from
closing the main transaction before having finalised a binding agreement with a purchaser that
19 Negotiating Merger Remedies, Statement of the Bureau of Competition of the Federal Trade
Commission, January 2012.
173

has obtained approval from the authority. Because the agreement will not be finalised until
the authority’s acceptance, it gives the buyer enormous scope to renegotiate the deal. Securing
approval to do a post-closing divestiture, even if not necessary, preserves the ability of the seller
to threaten to walk away and turn to an alternative purchaser.
For example, in Holcim/Lafarge,20 the Commission accepted the parties’ proposal to divest
the divested business through one of two alternative mechanisms. The first option was to divest
the business through a standard M&A procedure. The second option, which had not been con-
templated before in the Commission’s practice, was a ‘hybrid option’, which allowed the parties
to divest part of the divestment business through capital markets.21 In a first step, the parties
would propose an ‘anchor investor’ for the divestment business that would acquire a share-
holding below 50 per cent, which would de facto confer control in the divestment business. The
second step would entail the remaining shares being disposed of through an IPO or a spin-off.
Eventually, CRH agreed to acquire the divestment business but the availability of the described
‘hybrid option’ likely increased the merging parties’ leverage in the negotiations with CRH.
Even where an upfront buyer is necessary, there are certain contractual arrangements that
may be used to lock the potential buyer in. For example, the parties to the negotiations may
enter into a side letter whereby the buyer agrees to go ahead with the purchase of the divestiture
package unless the authority requires changes to the divestiture process that are detrimental to
the buyer’s position. To protect against the authority requesting additional assets to be included
in the divestiture package, the parties may also agree beforehand on a price increase, or at least
on a methodology to calculate such a price increase.
When and how to approach the authorities

As mentioned above, there is a trade-off between timing and the scope of a divestiture pack-
age. But there are further strategic timing considerations that practitioners should take into
account for a successful divestiture process. A successful strategy will balance preserving the
arguments or goals that are important to the client, preserving credibility with the authority,
and gathering sufficient information about the authority’s competitive concerns to identify the
most appropriate and proportionate remedy.
In any case where remedies are a serious possibility, it is advisable to cooperatively engage
with the authority sooner rather than later. However, this does not mean that the parties should
necessarily open remedy negotiations or engage remedies specifically as soon as possible.
There are two main approaches to managing the process leading up to remedy negotiations:
the ‘funnel approach’ or the frontloaded approach. The funnel approach involves starting the
debate with the authority by discussing the easiest issues first and working through each issue
to convince the authority that the transaction raises no concerns regarding that issue. The time
to discuss remedies arrives when the debate reaches a point where it is no longer possible to
convince the authority that the transaction does not raise any competition issues, or when the
parties have run out of time.
The main advantage of this approach is that it conveys a strong message that the parties are
not willing to divest or are strongly committed to the minimum divestiture package. The author-
ity will thus be able to stay focused on evaluating the arguments about why the transaction
20 Holcim/Lafarge (COMP/M.7252) Commission Decision of 15 December 2014.

21 Ibid., paragraphs. 490–491.
174

raises no concerns and will not redirect some of its investigative resources to remedies. The
drawback of this approach is that by the time the discussion reaches the point where remedies
ought to be offered, there may not be much time left for the negotiation of remedies and the
divestiture process. Where a divestiture is clearly required, this approach may also lead to a loss
of credibility with the authority.
The opposite approach is to present a proposal to the authority from the outset of the dis-
cussions of what the parties are willing to divest to solve a particular problem. The analysis of
the transaction can then be divided into two areas. On the one hand, the authority can review
the transaction on the merits as to some issues, while it can evaluate the remedies package for
other issues. If these two areas are not highly interrelated, this approach can be particularly
beneficial and time-saving. The drawback is that this approach may lead to the need to offer a
more far-reaching divestiture package. If there are strong links between the two areas, then it
is only possible to start with the negotiation of remedies at a later stage, once the parties have
a clear idea of the problems that they have to address. Otherwise the authority may fear that it
could lead to too much change in the divestiture package that may change the group of inter-
ested or appropriate buyers.
However, the choice of approach is not a binary one. There are hybrid options or combina-
tions of the funnel and the frontloaded approach that the parties may opt for. For example, one
may start by taking the funnel approach and then switch to the other approach. The question
then arises: when is the right time to switch? A possible answer is to switch when there is rea-
sonable certainty of what divestiture will be required. Another option is to change approach if
and when it becomes clear that the parties do not have a realistic prospect of convincing the
authority that the transaction does not raise concerns in a particular market. Once again, this
choice will depend on the parties’ needs and their response to the different strategies available.
The funnel approach is generally more appropriate in the broad sweep of cases. That said,
the frontloaded approach can be very successful under certain conditions, for example: (1) the
competitive issue to be remedied is clear close to the outset of the investigation; (2) either there
is not a realistic prospect of prevailing on the issue or the client wishes to divest anyway for
business reasons; (3) the remedy package is clear and likely to face little scepticism (e.g., it is a
stand-alone business); and (4) the client’s most important objectives are either timing or secur-
ing appropriate value for the package in a lengthy auction process.
Abbott Laboratories/St Jude Medical is an example of a concentration where remedies
were offered and approved in Phase I. The proposed transaction was initially notified to the
Commission in early October 2016 and only after the first state-of-play meeting, where the com-
mission informed the parties of the preliminary results of the Phase I investigation, did the par-
ties offer remedies, still within the deadline of 20 working days from the date of notification
set forth in the Implementing Regulation.22 The concentration was eventually conditionally
cleared in November 2016. This timeline was possible because the Commission’s concerns over
VCDs were raised early on in the review process. The parties had anticipated these concerns
and were willing to offer a global remedy to divest the entire VCD business of St Jude Medical.
22 Commission Regulation (EC) No. 802/2004 of 7 April 2004 implementing Council Regulation (EC)
No. 139/2004 on the control of concentrations between undertakings, Article 19(1).
175

Of course, as in any negotiation, the personalities of the negotiators may play a role in the
outcome of the negotiation. Practitioners may adopt one negotiation style or another depend-
ing on who is sitting on the opposite side of the table. For example, during the first three years
of Commissioner Vestager’s mandate, merger approval decisions subject to remedies have dou-
bled compared with the first three years of her predecessor, Commissioner Almunia.23 Thus,
a higher probability that remedies may ultimately be required in any given case may shift the
balance somewhat in favour of a frontloaded approach.
Special considerations in juggling multiple jurisdictions

An additional complication when evaluating remedies arises in cross-border deals. Merger con-
trol regimes around the globe have proliferated, and nowadays a cross-border merger may be
subject to review by dozens of authorities around the world. This means that multiple com-
petition authorities may require remedies to address the same or different concerns, not all of
which may be compatible with one another. Practitioners involved in this type of transaction
have come to the realisation that the design of remedies in cross-border transactions requires a
multi-jurisdictional approach from the start. It is important to make sure that the parties pre-
sent the transaction to the different jurisdictions that are reviewing it in a coherent manner,
and this also applies to the remedies they offer in different jurisdictions. This is becoming even
more important with the increasing inter-agency cooperation in the field of competition law
and the use of waivers. One possible strategy is to time notifications to ensure that the anti-
trust authorities in the US or the EU review the transaction ahead of other jurisdictions. That
way, the approach that these established authorities take can be used as a point of reference for
the other agencies, and often the authorities themselves may contribute to a more coordinated
approach across jurisdictions. Even between the US and the EU or EU Member States, practi-
tioners should give careful thought to the timing strategies in each jurisdiction. In some cases
it may be desirable to have both jurisdictions review the transaction in parallel. But in other
circumstances, depending on factors such as the likely timing of the investigation, remedies
discussion and industrial policy considerations, practitioners may find it more convenient to
have one case team ahead of the other.
The Holcim/Lafarge case is an example of a multi-jurisdictional transaction in which dif-
ferent authorities cooperated, even though the relevant markets in the cement industry were
defined as local markets. This concentration was reviewed by competition authorities in 20 dif-
ferent jurisdictions and it was not only subject to remedies in Europe. In this case, remedies
could not be global because of the local nature of markets that led to different overlaps across
the globe. In the US, for instance, the cement from the parties’ plants was transported along
a river basin to water-accessible terminals, and so this meant that the catchment areas were
much larger than in Europe. This brought in more competitors and also changed the nature
of the divestments that were required; for example, in some local markets, only a local termi-
nal was required because competitors with access to the river area otherwise had sufficient
excess production capacity. Proposing different types of assets in the EU and in the US required
ensuring that each authority understood the different factual underpinnings of the remedies in
the other jurisdiction and thus understood the different approaches being taken. Also, in that
23 PaRR Statistics: EC merger remedies cases double in Vestager’s first three years, 13 November 2017.
176

same case, the parties overlapped in some markets where terminals were in the US, while the
plants supplying them were in Canada. This required careful coordination with local counsel to
ensure that the US Federal Trade Commission and the Canadian Competition Bureau took the
same approach and harmonised their remedies with one another.
When a concentration is subject to review in multiple jurisdictions, if the concerns iden-
tified by the different regional or local competition authorities are similar, remedies that are
global in nature should be suitable to address concerns identified in any jurisdiction. This may
involve divesting assets that are geographically spread across borders in an integrated way.
177

PART VI
MERGER REMEDIES
INSIGHTS FROM
AROUND THE
GLOBE

15
Argentina
Pablo Trevisán1
Introduction
The rationale of the Argentine merger control is to prevent mergers that may result, with high
probability, in a detriment to the general economic interest.
Section 8 of Law 27,442 (the LDC)2 prohibits an economic concentration with the object or
effect that restricts or distorts, or that could restrict or distort, competition and from which
damage to the general economic interest may result.
In accordance with Section 14(b) of the LDC, the approval of certain notified transactions
may be subject to specific conditions that the National Competition Authority (ANC)3 may
establish. Under these circumstances, the notifying parties try to resolve the concerns of the
ANC by offering remedies to preserve competition that would otherwise be lost because of the
notified economic transaction.4 The ANC is responsible for ensuring that remedies are nec-
essary, clear, enforceable, effective, sufficient in scope and capable of being effectively imple-
mented within a reasonable period of time.
1 Pablo Trevisán is a Commissioner at the Comisión Nacional de Defensa de la Competencia (CNDC),

which is the Competition Authority for Argentina pending the establishment of the Autoridad Nacional
de la Competencia (ANC).
2 Argentine Competition Law, 27,442, complete text available at http://servicios.infoleg.gob.ar/
infolegInternet/anexos/310000-314999/310241/norma.htm (as of September 2019).
3 The new LDC, among other important reforms, created the ANC. The ANC will replace the CNDC and
it is expected that the ANC will be a more independent administrative body, whose members will be
elected through a public contest.
4 International Competition Network (ICN), ICN Merger Working Group, Merger Remedies Guide,
2016, available at www.internationalcompetitionnetwork.org/wp-content/uploads/2018/05/MWG_
RemediesGuide.pdf
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Argentina
Overview of the Argentine merger control system

Under reasonable merger control systems, agencies can exercise controls prior to the comple-
tion of the operation. The central idea is that blocking or restoring competition once an anti-
competitive concentration has been carried out is too complex, if not impossible.
As it is preventive, the merger control procedure should ideally operate prior to the con-
summation of the economic concentration and not after, which happens under the conduct
regime, to a large extent. The costs to be avoided, associated with ex-post control, are too high
for society when it is determined that a certain operation must be blocked or conditioned after
its consummation.
The problem with a control system that works ex post, as in practice happened in Argentina,5
is that it introduces a large part of the costs and eliminates, to a large extent, the benefits of a
preventive or ex-ante prospective procedure, making the procedure less attractive and ineffi-
cient, and in many cases useless.
Under a genuine ex-ante control system, the parties have important incentives to cooperate
since the delay in providing the relevant information to the agency runs at their expense. Until
the competition authority’s approval is not issued, the transaction in question cannot close or
consummate. Any delay resulting from the lack of information and full collaboration with the
enforcement authority is paid by the companies involved.
In an ex-post control system, cost increases and delays in procedures are frequent, largely
because there are no necessary incentives for the procedure to conclude in a short time, thus
increasing the private costs and, worse, the public costs of an ex-post control procedure.
One of the main benefits of ex-ante controls is to prevent anticompetitive concentrations by
preserving the status prior to the concentration, a situation that is not achievable with the pos-
sible high costs that adopting structural remedies would imply after the consummation of the
transaction under analysis, which can be costly for the parties and society in general. After the
firms are integrated, it would be costly, if not impossible, to impose a structural remedy, after, for
example, the closure of a factory, the discontinuity of production of certain products, the joint use
of distribution networks, or any other of these measures that might be impossible to roll back.
Merger remedies
There are some basic conditions that the merging parties should meet in order to get ANC’s
approval of the relevant remedies offered.
First, mitigation measures must be effective to prevent the modified concentration opera-
tion through them from restricting or distorting competition and avoid any detriment to the
general economic interest. This effectiveness will depend on the type of measure in ques-
tion. When analysing the mitigation measures offered by the parties, the ANC must examine
whether they are suitable, with a sufficient degree of certainty, to prevent the operation’s ability
to substantially reduce competition during the entire expected period of duration of the opera-
tion. For this reason, remedies that quickly take care of the problems detected would be pre-
ferred and transitory remedies would not be accepted unless the anticompetitive effects would
definitely not survive such remedies.
5 This was the result of the misapplication of Section 8 of Law 25,156 and other systemic failures, such as
the direct and indirect consequences of never putting in place the independent tribunal created in 1999.
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Argentina
Second, the ANC must examine whether the proposed measures, besides being effective, are
feasible to implement, execute and monitor.
The feasibility of implementation and execution requires evaluating, for example, the exist-
ence of potential buyers that do not generate greater competition risks; the possibility of selling
an economic unit without losing its value (e.g., if it is separated from another unit that generates
the necessary inputs for its operation); and the time it will take for effective implementation
and whether it implies a risk in the affected market during the intermediate period.
On the other hand, the absence of effective monitoring mechanisms by the ANC makes
the mitigation measure offered a mere declaration of intentions lacking of any binding force.
Likewise, at the other extreme, the feasibility of a measure will be inversely proportional to the
intensity of the supervision that it requires. Therefore, it is the task of the parties that intend
to carry out the concentration operation to offer a sufficient and simple monitoring system to
ensure the effect that the mitigation measures pursue.
Moreover, mitigation measures, in addition to eliminating the aptitude of the operation
to substantially reduce competition, must be proportionate to the problem of competition
detected. In this way, in the face of alternative proposals for mitigation measures that the ANC
deems equally effective in eliminating the anticompetitive effects of the operation, the one that
is less burdensome will be preferred.
Finally, it is very important to bear in mind that evaluating the impact and delivery of inter-
ventions is an important, but often overlooked, aspect of public policy. Evaluations help
policy-makers understand what worked well and what has been less successful. They provide
the basis for continuous improvement and can drive legislative reform and policy development,
as well as informing future interventions.6
Recent trends
In accordance with Section 14(b) of the LDC, the approval of certain notified transactions may be
subject to some specific conditions that the ANC may establish.
Under these circumstances, the notifying parties try to resolve the concerns of the ANC by
offering remedies to preserve competition that would otherwise be lost because of the notified
economic transaction.
The conditions that the ANC may establish for the purpose of granting approval under
Section 14 of the LDC are varied. They may consist of divestment orders (asset sales) or other
obligations. Likewise, the conditions may be suspensive (i.e., the concentration cannot be con-
summated until they are met) or resolutory (i.e., if they are not met within the period estab-
lished by the ANC, the approval granted falls and leaves the concentration without effect, with-
out prejudice to any sanctions that may apply).
6 CMA, Merger Remedy Evaluations, June 2019.
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Argentina
As mentioned, during the previous few years the CNDC has made significant efforts to try
to adapt to the best international practices.7 On the merger control front, the CNDC has decided
various important and sensible merger cases, where remedies were needed.
Notwithstanding these efforts, which are laudable, we consider there is still some impor-
tant room for improvement, as some of the decisions may have not yet tackled the competition
concerns that were intended to be resolved through imposed remedies, such as fix-it-first or
upfront-buyer solutions.
The three main cases decided during 2018 are the following: Cablevisión/Telecom, Molinos/
Mondelez and ABInbev/SABMiller.
Cablevisión/Telecom8
No doubt, the most relevant concentration case that took place during 2018 was the merger
between Telecom Argentina SA and Cablevisión SA, owing mainly to the size of the companies
involved, the amount of the operation and the general concern aroused by the integration of two
of the main companies that make up the communications sector in Argentina.
The transaction was implemented as an absorption of Cablevision by Telecom, although
in fact the controlling group of the new integrated company became the one that, prior to the
operation, controlled Cablevisión (the Clarín Group). This resulted in the Telecom service port-
folio having a series of new commercial activities such as the provision of pay-TV, and made the
merged entity the first Argentine company with the capacity to offer extensive service packages
of the type known as ‘quad play’, which includes fixed telephony, mobile telephony, internet and
subscription television.
The case was decided by a divided vote, with a majority of four commissioners and a minor-
ity of one.9 The markets in which a greater horizontal overlap was detected and, consequently,
greater competition problems generated by the merger between Cablevisión and Telecom, were
a series of local markets for fixed broadband internet services, in which the operation left an
important set of customers without alternative providers that had their own networks.
The CNDC’s majority considered this occurred essentially in a set of 29 locations, in which
Telecom was the almost exclusive provider of fixed telephony, Cablevision was the leading pro-
vider of cable television, and the networks of both companies were virtually the only ones that
could be used to offer access to residential broadband internet customers.
To alleviate the competition problems in those mentioned locations, the parties presented
a structural commitment, for which they committed to transfer a total of 143,464 residential
customers from the residential internet service previously provided by Telecom (through its
7 Previously, the CNDC had imposed conditions on several cases, among others: Telefónica/ATCO & ACISA,
under Resolución SDCyC 53/2000; Fresenius/RTC, Resolución 83/2000; Minetti/Hormix, Resolución
SDCyC 21/2001; Quilmes/Brahma, Resolución 5/2003; Bimbo/Fargo, Resolución SCT 131/2004; Petrobras/
Pérez Companc, Resolución SCDyDC 62/2003; Arcor/La Campagnola, Resolución SCI 11/2006; Alpargatas/
Dictamen CNDC 687/2008; Cablevisión/Multicanal, Resolución 1011/2009. The experience of the CNDC on
this field has not been very positive. The fulfilment of these remedies found various practical obstacles
(e.g., Quilmes/Brahma case, Cablevisión/Multicanal, Petrobras/Pérez Companc, to name a few).
8 See Resolución RESOL-2018-374-APN-SECC#MP, 29/06/2018, in re: Cablevisión SA, Cablevisión Holding
SA, Telecom Argentina SA, Fintech Media Llc Y Fintech Telecom Llc S/ Notificación Article 8 Ley Nº 25.156
(CONC. 1507). Available at https://www.argentina.gob.ar/sites/default/files/resolucion_y_dictamen.pdf
9 The author was a Commissioner at CNDC at the time this case was decided and voted for the minority.
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Arnet brand) to an independent provider (the company Universo Net SA), which already had a
background as a provider of cable television and internet in other locations. The transfer was
complemented by the transfer of the right of use of the Arnet brand in the localities involved
and with physical access to the Telecom network (which was the one used to access the cus-
tomers in question and which Telecom would continue to use concomitantly to provide a fixed
telephone service).
The provider that would take care of the divestment services was a company belonging
to the Valentini group. The group presented information to the CNDC on its background as a
provider of telecommunications and broadcasting services, as well as its business plan and
the contracts signed between Universo Net and Telecom that, among other things, required
the provision of the service with a certain level of quality and the deployment of an alternative
fibre-optic network.
From the analysis of the information provided by Telecom and Universo Net, the majority
of the CNDC concluded that the Valentini group had the necessary experience, economic capac-
ity and knowledge to perform as an effective telecom competitor in the locations to which it
was entering. The majority of the CNDC advised the approval of the structural commitment
as presented.
The minority of the CNDC, on the contrary, considered that the operation fell within the
prohibition in Section 7 of Law 25,156, and that the commitments offered were not sufficient
to resolve doubts regarding their potential to restrict competition and generate damage to the
general economic interest.
The minority considered that the remedy offered by the parties was neither effective, suit-
able nor proportionate owing to, among other things, the indirect corporate relationship that
existed between the Valentini group and the Clarín group, as both economic groups had been
long-term partners in a cable television operating company, CV Berazategui, in the town of
Berazategui (Buenos Aires province) until several months after the Telecom/Cablevisión trans-
action was closed and notified to the CNDC. The minority also highlighted some problems in
the agreement proposed by the parties, which made it difficult to produce a true ‘competition in
quality of services’ between Telecom and Universo Net.
A second sector in which the CNDC detected possible competition problems was that of
mobile telephony, in which Telecom (through its Personal brand) had a nationwide market
share of just over 31 per cent, while Cablevisión (through its Nextel brand) owned a share of
approximately 3 per cent. Although in the market in question there are two large additional sup-
pliers with high market shares (AMX, through its Claro brand, with a market share of 34 per
cent, and Telefónica, through its Movistar brand, with a market share of the 32 per cent), the
main problem of competition in this case had to do with the great increase that occurred in the
concentration of the radio spectrum that was left to Telecom as a result of the operation under
analysis (which happened to be more than 49 per cent).
That spectrum concentration, however, had already been analysed by the National
Communications Agency (ENACOM), which had provided that the merged entity should return
80 MHz of radio spectrum (equivalent to 20 per cent of the total). Some additional recommen
dations addressed to ENACOM and the Ministry of Modernisation, related to the return process
and future use of the radio spectrum, were included in CNDC’s opinion. These recommendations
sought to enable a number of companies with their own infrastructure to make reference offers
as virtual mobile operators, under non-exclusive and non-discriminatory conditions.
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An additional issue related to Telecom offering the quad play service package and the pos-
sibility that this could serve as a tool to displace competitors from the markets involved in that
package (i.e., fixed telephony, mobile telephony, internet and subscription television). This
point was included in the commitment offered by Telecom and Cablevisión, through a clause
whereby the parties of the merger under analysis agreed not to jointly market the pay-TV and
mobile communications services until mid-2019, or until the possibility of requesting the satel-
lite subscription television registration by all telecommunications service operators is enabled.
Looking ahead, it will be interesting to analyse the results obtained from CNDC’s evaluation
of the impact of the conditions imposed.
Molinos Río de la Plata/Mondelez10

The operation consisted of the acquisition by Molinos and Molinos IP of two production plants
and four dry pasta brands belonging to Mondelez. This operation involved the exit of Mondelez
from the dry pasta business.
The operation also involved the increase in the market share of Molinos in a market of dif-
ferentiated products, and, by a majority vote, the CNDC required the divestiture of one of the
acquired brands to Bonafide, which had no previous participation in the market in Argentina
and was part of a group that was successfully developing the pasta business in other countries,
such as Chile and Peru.
The minority11 highlighted that the divestiture offered as remedy could not be considered
effective, suitable or proportionate, as Bonafide, the acquirer of the divested brand, Vizzolini,
had not committed to anything under the respective merger control proceedings and, conse-
quently, could not be obliged to comply with any of the commitments filed under those pro-
ceedings not to market pastas in Argentina under the Vizzolini trademark; and did not fulfil the
conditions to be considered independent from the seller, Molinos, as Bonafide was one of the
main distributors of Molino’s products in Chile.
As mentioned in the previous case, looking ahead it will be interesting to analyse the results
obtained from CNDC’s evaluation of the impact of the conditions imposed.
AB Inbev/SABMiller12
Another major economic concentration the CNDC resolved during 2018 corresponded to the
acquisition by Anheuser-Busch InBev NV SA (AB INBEV) of the control of the SABMiller PLC
company. This operation had a global scope, but specifically in Argentina it implied the transfer
of control of the firm Cervecería Argentina SA Isenbeck (CASAI) and its brands to AB INBEV.
10 See Resolución RESOL-2018-363-APN-SECC#MP, 22/06/2018, in re: Molinos Sau, Molinos Río De La Plata
SA., Intercontinental Great Brands Llc Y Mondelez Argentina SA S/ Notificación Article 8° De La Ley 25.156
(Conc. No. 1173). Available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/conc-1173.pdf
11 The author was a Commissioner at CNDC at the time this case was decided and voted for the minority.
12 See Resolución RESOL-2018-136-APN-SECC#MP, 14/03/2018, in re: Anheuser-Busch Inveb Nv/Sa Y
Sabmiller Plc S/ Notificación Article 8 De La Ley 25.156 (Conc. 1375). Available at http://cndc.produccion.
gob.ar/sites/default/files/cndcfiles/CONC-1375.pdf.
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Both AB INBEV and SABMiller were, before the operation, leading companies in the manu-
facture and marketing of beer globally, and between them they accounted for around 30 per cent
of world beer sales. Both also had portfolios with more than 200 brands of beer each, some of
which are sold in many different countries.
In Argentina, the transaction between AB INVEB and SABMiller aroused concern about
the increase in concentration that it implied in the national beer market, since both com-
panies jointly represented almost 80 per cent of that market. In effect, the firm Cervecería
y Maltería Quilmes SA (CMQ), of AB INVEB, was the leading firm in the market (75 per cent),
as its brands Quilmes and Brahma are the two most sold in the country. On the other hand,
CASAI, of SABMiller, was the third firm (with a participation of almost 5 per cent). In terms of
the Herfindahl-Hirschman (HHI) index, the operation generated a level of concentration in the
beer market of more than 6,000 points, significantly higher than the 2,500 points that the inter-
national standard considers as indicative of a highly concentrated market.
As a consequence of this situation, the CNDC began to carry out a series of empirical stud-
ies aimed at estimating the main effects that the concentration between CMQ and CASAI could
have on the Argentine beer market. While carrying out these studies, however, the parties vol-
untarily submitted a disinvestment pre-agreement, for which AB INVEB promised to transfer
to CCU the brands marketed by CASAI in Argentina (Isenbeck, Diosa, Warsteiner, Grolsch and
Miller), three CMQ own brands (Norte, Iguana and Báltica), a cash payment and an agreement
on the interchangeability of bottles. In exchange for this package, CCU agreed with AB INBEV
the early cancellation of the licence it had in Argentina to manufacture and commercialise
Budweiser beer, whose international ownership belongs to the AB INVEB group since 2008.
To evaluate the possible effects of the concentration operation itself and the proposed
divestment associated with it, the CNDC considered two possible scenarios: first, approval with-
out conditions, in respect of which the analysis carried out indicated the appearance of impor-
tant negative effects on the general economic interest; and second, the approval of the opera-
tion subject to compliance with the structural commitment provided for in the pre-agreement
for divestment.
Complementing the analysis with quantitative methods such as the calculation of the
price upward pressure index, the CNDC determined that the second scenario (that is, the one
that included the divestment proposal) was positive, since the position of CCU was reinforced
(from 20 per cent to almost 23 per cent market share) and that of AB INVEB remained virtually
unchanged. In addition, the CNDC considered that the early cancellation of the CCU licence on
the Budweiser brand eliminated a possible channel for the transmission of sensitive informa-
tion and for the coordination of market positions, since the fact that an AB INVEB brand was
commercialised in Argentina by CCU implied an irregular situation in terms of effective com-
petition between both economic groups. Additionally, the CNDC interpreted that the proposed
structural commitment was commercially viable, given that CCU was a committed buyer and
the disinvested assets improved its competitive position in the market (and even eventually
became more valuable in the hands of a direct competitor of AB INVEB).
The CNDC, therefore, concluded that the proposed commitment moderated the unilateral
effects of the concentration operation under study, by preventing the growth of AB INVEB on
the basis of the incorporation of SABMiller brands, while improving incentives to compete by
CCU. The calculation of the price upward pressure index carried out for the different scenarios
also supported the position that the structural commitment to divestment made it unlikely
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that significant price increases would occur. Therefore, the CNDC advised the approval of the
proposal for divestment and the exchange of trademarks submitted by the firms involved, and
authorised the operation subject to compliance with that proposal.
We believe that it would have been better if the CNDC had taken the opportunity under this
concentration to carry out an alternative analysis, giving greater consideration to fostering the
development of the craft beer sector and SMEs related to the Argentine beer market.
Likewise, we consider that the issue related to the transfer of the Budweiser brand from
CCU to AB Inbev was an absolutely independent matter to this transaction and, accordingly,
the remedies should have been imposed independently of this issue. In principle, CCU and AB
Inbev were free to terminate any time the Budweiser brand licence agreement that bound them
until 2025, and, eventually, the CNDC would have had the opportunity to evaluate and decide the
fate of an eventual anticipated resolution of that agreement, as the parties should have had to
notify that resolution to the CNDC in due course.
Unfortunately, none of this happened in this case and an excellent opportunity to increase
competition and protect the general economic interest in the Argentine beer market has prob-
ably been lost.13
As mentioned while commenting on the previous cases, looking ahead, it will be interesting
to analyse the results obtained from CNDC’s evaluation of the impact of the conditions imposed.
Conclusion
Merger remedies is still a pending issue in Argentina and it has had its ups and downs. Without
prejudice to the reforms initiated at the end of 2015, which represented important and enor-
mous positive changes to the general competition regime in Argentina, we consider that in
terms of merger remedies, the ANC still has a significant way to go to continue to improve its
best practices in the field.
In particular, we consider that in the future it will be very important that the ANC, in those
particular cases that may come to its knowledge, weigh all the considerations that are neces-
sary in the respective market under analysis, to ensure that the remedies eventually imposed,
whether structural or behavioural, tackle a sufficient number of factors that may allow them
to be effective, suitable, and feasible to implement, execute and monitor, so as to maintain the
competition conditions in the respective market.
Likewise, the monitoring and follow-up mechanisms of the remedies that are imposed
must be significantly improved with proactive actions by the ANC and, not least, ex-post evalu-
ations should be carried out by the ANC to allow a permanent review of the results and the effec-
tiveness of the remedies that have been imposed in each case.
Finally, and not less important, while the ex-post merger control system is still in place in
Argentina, we consider that the ANC, under those cases that prima facie may be subject to con-
ditions, shall be open to requiring provisional measures to prevent damage or the continuation
of damage, from when the respective transaction is closed or from when the ANC prima facie
considers that the relevant operation may require divestments, until the moment of its effec-
tive fulfilment.
13 The author was a Commissioner at CNDC at the time this case was decided but could not vote on the case.
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As we have previously mentioned, ex-post merger systems are unusual worldwide and con-
sequently, to avoid their high cost and impossible solutions, they require a constant, detailed
and case-by-case procedural review by the ANC to mitigate the effects of this rare transitional
merger review system.
As in several areas of competition law in Argentina, many important and substantial
improvements have been made during the last four years, with a huge challenge still ahead that
may give the opportunity to consolidate those changes, improve practices and, above all, finally
make competition law a matter of long-term public policy in Argentina.
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16
Brazil
Marcio Soares, Renata Zuccolo and Paula Camara1
Introduction
The Brazilian antitrust authority (CADE) has been showing an increased sophistication and
higher levels of scrutiny in the analysis of complex merger cases over recent years. For instance,
between January 2017 and July 2019, 15 merger cases, concerning both domestic and global
deals, were only approved by CADE after the negotiation of considerable remedies packages.2
1 Marcio Soares and Renata Zuccolo are partners, and Paula Camara is a senior associate at Mattos Filho,
Veiga Filho, Marrey Jr e Quiroga Advogados.
2 Cases approved with remedies from January 2017 to July 2019: Merger Case No. 08700.004860/2016-11
(Applicants: BM&FBOVESPA SA – Bolsa de Valores, Mercados e Futuros and CETIP SA– Mercados
Organizados), Merger Case No. 08700.004211/2016-10 (Applicants: TAM Linhas Aéreas SA, Iberia
Líneas Aéreas de Espana, SA Operadora, Sociedad UnipersonaI and British Airways Pico), Merger
Case No. 08700.001642/2017-05 (Applicants: Itaú Unibanco SA and Banco Citibank SA), Merger Case
No. 08700.001097/2017-49 (Applicants: Bayer Aktiengesellschaft and Monsanto Company); Merger
Case No. 08700.004163/2017-32 (Applicants: Grupo Petrotemex SA de CV and Petróleo Brasileiro SA);
Merger Case No. 08700.002165/2017-97 (Applicants: Arcelormittal Brasil SA and Votorantim SA);
Merger Case No. 08700.001390/2017-14 (Applicants: AT&T Inc and Time Warner Inc); Merger Case No.
08700.005937/2016-61 (Applicants: The Dow Chemical Company and E.I Du Pont de Nemours and
Company); Merger Case No. 08700.004431/2017-16 (Applicants: Itaú Unibanco SA and XP Investimentos
SA); Merger Case No. 08700.007483/2016-81 (Applicants: WEG Equipamentos Elétricos SA and TMG
Indústria e Comércio de Turbinas e Transmissões Ltda), and Merger Case No. 08700.001642/2017-05
(Applicants Itaú Unibanco SA and Banco Citibank SA); Merger Case No. 08700.007777/2017-76
(Applicants: Praxair, Inc. and Linde Aktiengesellschaft);Merger Case No. 08700.004494/2018-53
(Applicants: Twenty-first Century Fox, Inc. and The Walt Disney Company (Brasil) Ltda.); Merger Case
No. 08700.005705/2018-75 (Applicants: Notre Dame Intermédica Saúde S.A., Mediplan Assistencial
Ltda, Hospital Samaritano Ltda, and Hospital e Maternidade Samaritano Ltda.); Merger Case No.
08700.005705/2018-75 (Applicants: Notre Dame Intermédica Saúde S.A., Mediplan Assistencial Ltda,
Hospital Samaritano Ltda, and Hospital e Maternidade Samaritano Ltda.).
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Brazil
During this period, CADE has indicated that it will take a stricter approach to remedy nego-
tiations, with a clear preference for structural remedies, at least when it comes to horizontal
mergers. Moreover, the experience shows that CADE has introduced new tools in the negotia-
tion of remedies and has been focusing strongly on both the nature of the remedies package and
the feasibility of its implementation in the short term.
This approach creates important challenges for merging parties. As a consequence, it is
even more important that the parties identify in advance the potential antitrust concerns and
define the proper strategy for the Brazilian merger control review as soon as possible whenever
a complex transaction is expected to give rise to competition concerns in Brazil.
This chapter provides an overview of recent trends regarding remedies in Brazil, and dis-
cusses practical aspects of the Brazilian merger control regime that are key for transactions
that require remedies negotiations with CADE as a condition to receive its approval.
Remedies: main goals pursued by CADE

Remedies are tools to address concerns raised by the antitrust authority during the review
of complex mergers. The main statute applicable to the negotiations of remedies in Brazil is
Law No. 12,529/2011 (the Brazilian Antitrust Law), according to which remedies are restrictions
that are necessary to mitigate any adverse effects of a given concentration in a certain rele-
vant market.3
It is a common practice among competition authorities around the globe, such as the
European Commission (EC), the Federal Trade Commission (FTC) and the United States
Department of Justice (DOJ), as well as international bodies such as the International
Competition Network (ICN) and the Organisation for Economic Co-operation and Development,
to issue guidelines that establish the main goals and principles that should be observed when
negotiating remedies.4 The remedies guidelines released by CADE in October 20185 and the
authority’s recent practice show that the Brazilian authorities tend to follow some goals and
principles when it comes to remedies negotiations. Such goals and principles can be summa-
rised as follows:
• Proportionality – according to CADE’s guidelines, proportionality is one of the principles
that shall be taken into account to guarantee the effectiveness of the remedy. This is in line
with the ICN’s guidelines, according to which the remedy should be proportional to the
issues raised by the transaction (i.e., they should be tailored and specifically address the
antitrust concern related to that merger).6
• Timeliness – this principle is also set out on both CADE’s remedies guidelines and the ICN’s
guidelines. According to these documents, the remedy should address the concern in a
timely manner.
3 See Article 61, Paragraph 1.

4 See, i.e., the Commission Notice on remedies available at: http://ec.europa.eu/competition/mergers/
legislation/files_remedies/remedies_notice_en.pdf.
5 CADE’s remedies guidelines were made available for public consultation on 23 May 2018 and we take
into consideration the main concepts therein in the 2018 edition of this Guide. The final guidelines were
made available on 16 October 2018 and we updated this chapter accordingly, highlighting differences
between the draft and final version when applicable.
6 Available at www.internationalcompetitionnetwork.org/wp-content/uploads/2018/05/MWG_
RemediesGuide.pdf .
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• Feasibility – this is another principle that is commonly highlighted by remedy guidelines

around the globe. The remedy should be feasible, meaning that it should be subject to easy
implementation by the parties and easy monitoring by the authorities.
CADE’s experience
CADE’s history
As demonstrated by the table below, the majority of merger cases reviewed by CADE are
approved without remedies.
2013* 2014 2015 2016 2017 2018 2019
Approved with remedies 2 8 7 6 5 6 4
Total merger cases analysed by CADE 442 403 305 390 378 404 213
* Source: prepared by the authors based on data available on CADE’s website (www.cade.gov.br).
The table above focuses on cases with remedies negotiated with or applied by CADE after ana-
lysing the merits of the merger. Cases with mere alterations in the non-compete clause of the
transaction agreement are not contemplated.
The main reason for the apparently small number of mergers approved with remedies is
that complex cases account for a very small percentage of the mergers reviewed by CADE – most
of which constitute simple transactions subject to the fast-track proceeding and are cleared
with no remedies in a very expeditious manner.
Complex cases, however, have been facing a more rigorous approach by CADE. The Brazilian
antitrust review commonly involves substantial and lengthy market tests with customers, com-
petitors and suppliers of the parties, specific economic analysis carried out by CADE’s Economic
Department, and, in cases of cross-border transactions, close coordination and communication
with foreign antitrust authorities, in particular those from Europe and the United States.7
As mentioned above, this approach has led to the negotiation of increasingly sophisticated
remedies packages, especially between January 2017 and July 2019.8 Some of these cases are
summarised below:
• Praxair/Linde – a global merger between two of the major players in the industrial gases
business with considerable overlaps (and a minor vertical integration) in the bulk, cylin-
der and on-site industrial, special and medical gases. The merger was approved subject to
structural remedies with the objective to completely eliminate the horizontal overlaps (i.e.,
assets in the bulk and cylinder industrial and special gases) and mitigate the vertical rela-
tionship. The remedies also included conditions on the profile of the upfront buyer (which
should be an international player and acquire assets located not only in Brazil but also in
US and Europe). The structural remedies were combined with a behavioural remedy that
aimed at avoiding exclusionary or discriminatory behaviours.9
• Disney/Fox – the cross-border deal between Disney and Fox was subject to a package of
structural and behavioural remedies to eliminate the competitive issues in the market for
sports channels production and licensing in Brazil, which included the sale of all assets
related to the Fox Sports channel in Brazil (including the licensing of the ‘Fox’ brand) and
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Brazil
the prohibition of the merged company to participating in new bid processes to acquire
broadcasting rights of sports events. The potential buyer also had the right to choose which
broadcasting rights of sports events would be sublicensed to it by the parties.10
• Arcelormittal/Votorantim – domestic deal regarding the acquisition of local long steel
producer Votorantim Siderurgia by ArcelorMittal’s Brazilian subsidiary. The merger was
approved subject to two packages of structural remedies combined with behavioural rem-
edies (including a performance commitment). The first package related to the drawn and
ordinary long rolled steel business and the second related to wire drawing and steel wire
rod machines. The packages could not have the same potential buyer, and a buyer could not
already have a share of above 20 per cent of the relevant markets.11
Types of remedies adopted by CADE

The remedies adopted by CADE are usually either structural or behavioural in nature, although
CADE has requested a combination of the two in several cases.
According to the Brazilian Antitrust Law,12 structural remedies may include: the sale of a
set of assets that constitute a business activity; a spin-off of a company; the sale of corporate
control or of equity interests; or the transfer of intellectual property rights, including, among
others, patents and trademarks.
On their turn, behavioural remedies may include the following:
• obligations of transparency when negotiating supply or distribution agreements with
third parties;
• the obligation of maintaining non-discriminatory or competitively appropriate behaviour
with third parties in supply or distribution agreements;
• the suspension, elimination or obligation not to adopt de facto or de jure exclusivity clauses
in commercial relations with related or unrelated parties;
• the obligation to supply or provide access to key assets, inputs or infrastructure
for competitors;
• the obligation to file transactions with CADE, even when they do not meet the
legal thresholds;
• the suspension of political or corporate rights arising from equity shares;
• the prohibition to access, share or transmit competitively sensitive information between
the applicants’ related parties; and
• mandatory licensing of intellectual property rights, including trademarks.
10 Merger Case No. 08700.004494/2018-53 (Applicants: Twenty-first Century Fox, Inc. and The Walt Disney
Company (Brasil) Ltda.).
11 Merger Case No. 08700.002165/2017-97 (Applicants: Arcelormittal Brasil SA and Votorantim SA)..
12 Refer to Article 61, paragraph 2.
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Like most competition authorities around the globe,13 CADE has indicated, in different
opportunities,14 that structural remedies (and in many cases a combination of structural and
behavioural remedies) are preferred over purely behavioural remedies. The reason is that struc-
tural remedies aim to re-establish the competitive dynamics of the relevant markets without
the need for future monitoring15 – which can be costly and time-consuming. This attention to
the feasibility of the remedy has made CADE in recent cases indicate that, whenever possible,
parties should present the remedy with an up front buyer.
According to CADE’s remedies guidelines, the first step towards the implementation of
a structural remedy is the definition of the divestment assets, which should be able to exert
enough competitive pressure to mitigate the concerns raised by the proposed merger. The set of
assets should be complete (i.e., it must comprise all necessary assets that makes for an effective
remedy) and well defined.
CADE has also established its ‘preferred’ type of buyer, which, according to the guidelines,
should prove its legitimate interest in the divestment assets and its ability to keep them operat-
ing in the market in a competitive manner. The buyer must also be independent from the par-
ties’ economic groups. In terms of timing, the buyer may have to be defined before the approval
or closing of the transaction (‘fix-it-first’ cases, such as cases with very few viable buyers), but
there are also instances in which the buyer may be defined after the closing only. In other cases,
CADE approves the transaction, but closing is conditioned upon the identification of the buyer
(‘upfront buyer’ cases). According to the remedies guidelines, having an upfront buyer benefits
both CADE (which will have a higher degree of certainty involving the remedy) and the parties,
who will benefit from a faster process and avoid crown jewel provisions. In all cases, the buyer
must be approved by CADE and, preferably, the parties should complete the sale of the assets
within three to six months.
Despite all of the above, CADE’s recent experience shows that the Brazilian antitrust author-
ity appreciates that purely behavioural remedies may be adequate to address the competition
concerns arising from a given transaction without the need for more intrusive requests, espe-
cially in the context of vertical mergers where behavioural commitments may be appropriate
to preserve the efficiencies that are expected to be generated by the notified transaction. This
approach, when applicable, is in line with the proportionality principle that should be taken
into account by the authorities when negotiating remedies.
13 According to the Commission Notice on remedies, ‘the basic aim of commitments is to ensure competitive
market structures. Accordingly, commitments which are structural in nature, such as the commitment
to sell a business unit, are, as a rule, preferable from the point of view of the Merger Regulation’s objective,
inasmuch as such commitments prevent, durably, the competition concerns which would be raised by the
merger as notified, and do not, moreover, require medium or long-term monitoring measures.’ Available
at: http://ec.europa.eu/competition/mergers/legislation/files_remedies/remedies_notice_en.pdf.
14 See, i.e., Councillor Polyanna Vilanova’s speech, ‘Antitrust Remedies: Historical perspective and Trends’,
IBRAC, Brasilia, Brazil, 29 March 2018.
15 See CADE’s Horizontal Merger Guidelines, available at: www.cade.gov.br/acesso-a-informacao/
publicacoes-institucionais/guias_do_Cade/guia-para-analise-de-atos-de-concentracao-horizontal.pdf.
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For instance, despite the clear preference that the Brazilian antitrust authority shows for
structural remedies, statistics demonstrate that, in many cases, behavioural remedies have
been shown to be sufficient and acceptable by CADE. The table below outlines the percentage of
behavioural and structural remedies applied by CADE over the past six years.16
2013 2014 2015 2016 2017 2018* 2019
Behavioural and structural 0% 35% 42% 0% 0% 60% 50%
Structural 100% 20% 25% 18% 20% 0% 0%
Behavioural 0% 45% 33% 82% 80% 40% 50%
* Statistics available until July 2019.
These statistics show that purely behavioural remedies prevailed in 2016 and 2017, and contin-
ued to be relevant in 2018 and 2019. However, these statistics must be read with care and put
into the right context: in all such cases, there were specificities of either the notified transaction
or the markets concerned (or both) that allowed CADE to be open to accept purely behavioural
remedies in these specific cases, despite its preference for structural solutions. We present
below a short overview of some past cases in which behavioural remedies alone were sufficient
to address the concerns raised by CADE during the review:
• Estácio/TCA – this was a merger in the Brazilian education market. CADE identified potential
anticompetitive effects in the distance learning market in nine Brazilian cities and 20 dif-
ferent graduate courses. To address these concerns, the parties undertook the commitment
to limit the students’ enrolment in the affected locations during four academic semesters,
thus creating more opportunities and allowing the entry and growth of other competitors.17
• ALL/Rumo – this was a merger in the logistics services market in Brazil, which entailed vertical
links involving railway transportation. CADE considered that the merger had the potential to
foreclose the market and favour tie-in sales. CADE and the parties negotiated a series of com-
mitments that involved all the services that the resulting company would provide, including
rail transport, transhipment, storage and ship loading. Among others, the new company must
guarantee that its competitors will have access to its infrastructure. To avoid discrimination,
the parties must also follow objective parameters for pricing the services provided to competi-
tors, which can be taken to private arbitration in the event of conflicting positions between
the merged entity and the entity interested in acquiring the service.18
• Bradesco/HSBC – this transaction involved the acquisition of HSBC by Bradesco, both pri-
vate banks active in Brazil. The merger was approved with a series of 19 behavioural com-
mitments, which included a commitment by Bradesco to refrain from making any rival
acquisitions for at least 30 months, as well as the adoption of a compliance programme and
the agreement on a certain quality of services provided to consumers.19
• Joint venture between Bradesco/Banco do Brasil/Itaú Unibanco/Santander/CEF – this
transaction involved the creation of a credit bureau that would collect information on con-
sumers’ financial history for use by credit providers. The merger was approved with a series
of behavioural commitments, which included non-discrimination provisions requiring
the parties (banks) to continue to provide information to rival credit bureaus and refrain
16 Source: Merger Control in Brazil: Frequently Asked Questions – IBRAC.
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from exchanging strategic information between competing banks, coordinating their

activities and engaging in ad campaigns for their services that would benefit only the par-
ties’ businesses.20
• Latam/Iberia/British Airways alliance – this transaction involved a joint business agree-
ment between the airlines to operate flights between Europe and Brazil, regardless of the
flight operator. The airlines agreed in behavioural commitments that would guarantee com-
petition on the route between São Paulo and London, making slots available at Heathrow
Airport free of charge to rivals for 10 years.21
• BMF&Bovespa/Cetip – this transaction involved the acquisition of clearinghouse Cetip by
the stock exchange operator BMF&Bovespa. The parties agreed on behavioural commit-
ments to guarantee the access to third parties to their infrastructure on fair, transparent
and non-discriminatory terms.22
• Itaú Unibanco/Citibank – this transaction involved the acquisition of Citibank’s retail opera-
tion in Brazil by Itaú Unibanco. The merger was approved conditional to a settlement agree-
ment by which Itaú Unibanco agreed on commitments to make it easier for clients to access
information, improve the quality of its services and staff through training, improve cus-
tomer satisfaction and set up certain compliance measures. Itaú Unibanco also undertook
the commitment of not acquiring players in the banking sector for 30 months.23
• AT&T/Time Warner – this transaction involved AT&T’s proposed acquisition of Time Warner.
The parties agreed on behavioural commitments to preserve competition in the markets
of television programming and pay-TV operations. Among the behavioural commitments
undertaken by AT&T is the maintenance of Sky Brasil and Time Warner’s programming
channels as independent businesses with their own governance and management struc-
tures. Sky Brasil and Time Warner must refrain from exchanging competitively sensitive
information or any information that could be used to discriminate against players that
are not part of their economic groups. AT&T also undertook the commitment to offer Time
Warner’s programming channels to non-affiliated packers and providers of pay-TV with all
the programming channels licensed to Sky in non-discriminatory conditions.24
• Petrotemex/Petrobras – this transaction involved Petrotemex’s acquisition of Petrobras’
PET resin maker and PTA supplier. The deal was challenged by M&G, the only other rival
in Brazil for the PET resin market. M&G claimed the merged entity would have incentives
to discriminate the rival in the sales of PTA (a material used in the production of PET).
Petrotemex agreed in a behavioural commitment to guarantee supply of PTA to M&G in con-
ditions that would guarantee M&G supply and prevent price discrimination against M&G.25
20 Merger Case No. 08700.002792/2016-47 (Banco Bradesco SA, Banco do Brasil SA, Banco Santander (Brasil)
SA, Caixa Econômica Federal and Itaú Unibanco SA).
21 Merger Case No. 08700.004211/2016-10 (TAM Linhas Aéreas SA, Iberia Líneas Aéreas de Espana SA
Operadora, Sociedad Unipersonal and British Airways Pico).
22 Merger Case No. 08700.004860/2016-11 (BM&FBOVESPA SA – Bolsa de Valores, Mercados e Futuros and
CETIP SA – Mercados Organizados).
23 Merger Case No. 08700.001642/2017-05 (Itaú Unibanco SA and Banco Citibank SA).
24 Merger Case No. 08700.001390/2017-14 (AT&T Inc and Time Warner Inc).
25 Merger Case No. 08700.004163/2017-32 (Grupo Petrotemex SA de CV and Petróleo Brasileiro SA).
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• NotreDame/Mediplan – this transaction involved the acquisition by NotreDame, a leading

health insurance provider and hospital operator in Brazil, of Mediplan, which provided
health insurance plans and operated a hospital in some cities in the State of São Paulo. In
this case, CADE took into account that Mediplan was likely exiting the market and, although
the transaction entailed significant overlaps in both markets, imposed only behavioural
remedies to maintain the pre-transaction credentialing structure of healthcare providers
in the health insurance plans provided by the parties.26
• SM Empreendimentos /AllChemistry – this transaction involved the acquisition of
AllChemistry by SM Empreendimentos, both pharmaceutical compounding companies,
which came to CADE’s knowledge after an individual blew the whistle. Although the trans-
action had not met the filing thresholds, CADE determined the parties to notify the trans-
action before CADE, due to concerns with SM Empreendimentos’ growth strategy through
multiple acquisition under the radar.27 The remedies imposed by CADE included: not to
perform M&A transactions for a two-year period, to notify all transactions in the follow-
ing two-year period and to notify all transactions in the market horizontally or vertically
related to compounding pharmacies for a four-year period.28
Practical guide on remedies negotiation with CADE

According to the Brazilian Antitrust Law, remedies may be either imposed by CADE or nego-
tiated with the parties to the transaction (in this case, the parties and CADE will enter into a
merger control agreement (ACC)). Remedies are often negotiated rather than imposed.29
CADE has been adopting an increasingly sophisticated approach towards remedies. With
that, parties have been required to carefully assess their strategies, including the most appro-
priate stage or time to approach the authority with a remedy proposal, taking into considera-
tion several variables such as timing constraints, the types of remedies that are appropriate to
address the concerns expressed by the authority and with whom to start the negotiation (as
further explained below). This section aims to address the most common questions regarding
such strategies.
Although no formal procedures have been issued yet, remedies guidelines with best prac-
tices and clarifications on proceedings were published in October 2018.30
When and with whom should remedies be negotiated?

Following formal submission of the filing, the merger review process in Brazil begins at the level
of CADE’s General Superintendence (GS). The GS is the body responsible for the initial review of
merger cases. Complex cases are subject to an ordinary proceeding, under which the parties
26 Merger Case No. 08700.004163/2017-32 (Grupo Petrotemex SA de CV and Petróleo Brasileiro SA).
27 See Article 88, paragraph 7 of Brazilian Antitrust Law, which provides that CADE may request the filing of
a transaction that does not met the filing thresholds up to a year following the closing of the transaction.
28 Merger Case No. 08700.005972/2018-42 (Applicants: SM Empreendimentos Farmacêuticos Ltda. and All
Chemistry do Brasil Ltda.)..
29 Merger Case No. 08700.005705/2018-75 (Applicants: Notre Dame Intermédica Saúde S.A., Mediplan
Assistencial Ltda, Hospital Samaritano Ltda, and Hospital e Maternidade Samaritano Ltda.).
30 See footnote 5, supra.
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Brazil
must file a comprehensive form with a substantial amount of market information. In cases that
are subject to an ordinary procedure, parties usually engage in pre-filing discussions with the
GS before the formal filing. The GS will also be responsible for the market test.
The GS can unconditionally clear the transaction. However, whenever the GS concludes
that a given merger should be either blocked or subject to remedies, the GS must refer the case to
CADE’s Tribunal by means of a non-binding opinion putting forward the reasons why it reached
this conclusion.31 When the case is sent to CADE’s Tribunal, it will be assigned to one of its com-
missioners, who will be responsible for reviewing and presenting the case before the other
commissioners.32 At the end, CADE’s Tribunal can either unconditionally clear the transaction,
block the transaction or approve it subject to remedies.
CADE’s internal rules33 set forth that ACC proposals may be presented any time between the
submission of the filing up to 30 days after the GS has issued an opinion challenging the case
and sending it to CADE’s Tribunal.34 Therefore, remedies can either be negotiated with the GS or
with CADE’s Tribunal.
The agreement negotiated with the GS must also be approved by CADE’s Tribunal, which
may reject it if it concludes that it is inadequate. In practice, however, statistics show that a
package carefully negotiated with the GS is usually accepted by CADE’s Tribunal, although addi-
tional commitments may be required. CADE’s best practice shows that, in many cases, CADE’s
Tribunal is already aware of the remedies being negotiated by the GS.
In practice, the parties should analyse the best approach to be adopted in each specific case.
If the parties are aware that remedies will be necessary to address the antitrust concerns and
more straightforward remedies are available, the parties may want to consider beginning the
negotiations with the GS. There are several benefits of initiating this process as early as pos-
sible: it shows good faith and transparency by the parties; it allows more time to negotiate the
remedies; and it expedites CADE’s review process. However, there are cases in which it will not
be possible or desirable to negotiate the remedies with the GS. These are cases where the rem-
edies are less clear-cut, it is difficult to reach an agreement with the GS, and the parties believe
that there are good grounds and the likelihood that the case will be cleared without any rem-
edies. In such cases, the parties may decide not to engage in any negation with the GS and only
start negotiating with CADE’s Tribunal (if necessary), knowing, however, that this may cause
delays in the total review period.
What is the approach when there is a multi-jurisdictional merger subject

to remedies?
In global transactions that may give rise to potential competition concerns in Brazil, it is very
likely that CADE will coordinate its review with other antitrust authorities worldwide (espe-
cially the FTC, the DOJ and the EC). For this purpose, CADE will typically ask the parties for a
31 According to the Brazilian antitrust law, CADE has up to 240 days (which can be extended by up to
90 days) to issue its final decision on a merger case. In practice, the review period is usually split equally
between GS and CADE’s Tribunal.
32 CADE’s Tribunal is composed of seven commissioners (one of whom acts as chair) and is responsible
for issuing final decisions on merger review cases. Decisions are taken by majority of votes.
33 CADE’s Internal Rules, dated 12 March 2018.
34 Article 165 of CADE’s Internal Rules.
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Brazil
waiver that allows the case team to contact the antitrust authorities in other jurisdictions, as
established in its remedies guidelines, which include a template of the waiver. In these cases,
CADE will take into consideration the discussions being held by the other antitrust authorities
and often tries to create in Brazil a package of remedies that is compatible with those being
applied abroad.35
In fact, this has been the approach taken by CADE since the Brazilian Antitrust Law entered
into force. In the first two cross-border transactions submitted in Brazil that required rem-
edies (Syniverse/MACH 36 and Munksjö/Ahlstrom37), CADE exchanged information with the
EC and negotiated a package of remedies that was similar to the one being applied in Europe.
CADE has increased its coordination with foreign antitrust authorities ever since (e.g., Section
11 with regard to negotiating similar packages of remedies). This coordination has been further
enhanced by cooperation agreements that CADE entered with a number of antitrust authorities
around the globe, including in Mexico, South Africa and India.38
Despite this trend, CADE does not always follow the package of remedies being adopted in
other jurisdictions. CADE conducts its own individual review and, wherever applicable, out-
lines the antitrust issues that are Brazil-specific. Conversely, there are a number of cases in
which the remedies negotiated in Brazil were different from the ones applied abroad. This is the
case of the Ball/Rexam39 merger, which was subject to Brazil-specific restrictions – including
the divestment of plants located in Brazil and the transfer of local client contracts. Similarly, in
the Continental/Veyance,40 Dow/DuPont 41 and Holcim/Lafarge42 cases, Brazil-specific remedies
were applied in addition to the coordinated remedy packages that had been negotiated abroad.
What are the main challenges imposed by the negotiation of each type of
remedy?
The first challenge faced by the parties is to convince CADE that the remedy will be sufficient to
address the antitrust concerns. CADE is often reluctant to accept purely behavioural remedies
as, among other things, they can be difficult to monitor.43 Therefore, hiring a monitoring trustee
on the parties’ expense has recently become part of the behavioural remedy, just as it is com-
mon practice when it comes to structural remedies.44
35 This cooperation is also mentioned on page 55 of the remedies guidelines.

36 See Merger Case No. 08700.006437/2012-13 (WP Roaming III S.à.r.l and Syniverse Holdings Inc).
37 See Merger Case No. 08700.009882/2012-35 (Munksjö AB and Ahlstrom Corporation).
38 Refer to www.cade.gov.br/assuntos/internacional/cooperacao-bilateral-1 or www.cade.gov.br/assuntos/
internacional/cooperacao-multilateral-1.
39 See Merger Case No. 08700.006567/2015-07 (Ball Corporation and Rexam PLC).
40 See Merger Case No. 08700.004185/2014-50 (Continental Aktiengesellschaft and Veyance
Technologies Inc).
41 Merger Case No. 08700.005937/2016-61 (The Dow Chemical Company and E I Du Pont de Nemours
and Company).
42 See Merger Case No. 08700.007621/2014-42 (Lafarge SA and Holcim Ltd).
43 This preference was expressly stated in the remedies guidelines (pages 15 and following of the final
version of the remedies guidelines). On pages 39 and following, the document states situations in which
CADE may accept purely behavioural remedies, with a special focus on vertical mergers.
44 See page 43 and following of the final version of the remedies guidelines.
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Brazil
However, structural remedies, albeit preferred by CADE, also impose challenges. The first
difficulty that is faced by the parties is to come up with the least burdensome remedy that is still
capable of mitigating the antitrust concern raised by the merger. As can be seen with regard to
the remedies guidelines, CADE will focus on measures that could maintain or create rivalry in
the affected market, meaning that any disinvestment package must be sufficient for a current or
new player to carry out the activity relevant for that transaction and effectively compete in the
affected markets (both the draft and final guidelines call this package a ‘viable and autonomous
business’).45 The package will likely involve tangible and intangible assets, and may include
contracts with customers or suppliers, key employees, research and development assets, reg-
isters and brands.46
Moreover, CADE has been signalling that the parties should present an up front buyer47 to
ensure that the remedy will address such concerns in a timely manner. In many recent cases,
CADE has imposed requirements on the profile and characteristics of the potential buyer, which
may pose an additional difficulty.48
Conclusions
As seen above, there are many variables connected to the negotiation of remedies in Brazil,
meaning that parties should carefully assess the best strategy to be adopted in each case, taking
into account the individual antitrust concerns of each transaction, timing restraints and the
remedy package being negotiated abroad (in the case of cross-border mergers), among others.
Parties must also have in mind that CADE’s review has become increasingly sophisticated,
with the addition of economic tools to the analysis of the remedy packages, meaning that par-
ties should carefully demonstrate that the proposed remedy is sufficient to address the anti-
trust concerns raised by the merger under analysis effectively and in a timely manner.
That being said, experience shows that, in general, CADE is prepared to move quickly and
engage in constructive dialogue towards a negotiated outcome. The Brazilian antitrust author-
ity tends to appreciate proactive and transparent approaches, and will usually entertain dis-
cussions related to more than purely structural remedies where the parties can show that less
intrusive solutions may be an option.
45 Besides the ‘viable and autonomous business’, the divestment package may include assets to be
carved-out from one or more parties (mix-and-match mechanism) and combined in a separated and
independent structure, which ultimately should be able to become a viable and autonomous business
in the guidelines wording (both draft and final versions).
46 See pages 19 and following of the final remedies guidelines.
47 See, for instance, Bayer/Monsanto (Merger Case No. 08700.001097/2017-49 (Bayer Aktiengesellschaft and
Monsanto Company)). This was also was expressly stated in the draft remedies guidelines under public
consultation (page 17 of the draft, while the final version of the guidelines (page 15) has changed the
approach and only highlighted a preference for defining the buyer before the approval of the transaction
(either fix-it-first or upfront buyer mechanisms). Post-closing buyers are considered, but CADE highlights
its scepticism with that approach, which would require more sustainable and robust remedies.
48 See, for instance, Dow/DuPont (Merger Case No. 08700.005937/2016-61 (The Dow Chemical Company
and E I Du Pont de Nemours and Company)). This was also was mentioned in both the draft and final
remedies guidelines (pages 34 and following), which focus on characteristics such as the market
share already held by the buyer in the affected market, independence in relation to the parties,
financial capacity and incentives to keep and develop the disinvested business, and expertise on the
affected markets.
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17
Canada
Jason Gudofsky, Debbie Salzberger and Kate McNeece1
The majority of mergers that are notified pursuant to the Competition Bureau (the Bureau)2
pre-merger notification regime under Canada’s Competition Act3 do not raise substantive com-
petition concerns. Of the 1,304 merger reviews conducted between April 2013 and September
2018, the Bureau concluded its review with no enforcement action in 1,247, or 96 per cent of all
completed reviews.4 The Bureau required a remedy or challenged the merger in only 41 cases,
or 3.1 per cent of all completed merger reviews.5 It is this small number of transactions that
raise competition concerns that poses the greatest challenge to competition law counsel and
their clients.
This chapter provides a practical guide for counsel and their clients facing a complex merger
review in Canada. First, we provide a brief overview of the Canadian merger review framework.
Second, we discuss the types of remedies typically required by the Bureau. Finally, we provide
strategies and considerations for remedy negotiations and formation in Canada.
1 Jason Gudofsky and Debbie Salzberger are partners, and Kate McNeece is a senior associate, at
McCarthy Tétrault LLP.
2 Under the Competition Act, the Commissioner of Competition (the Commissioner) heads the Bureau
and it is the Commissioner who has the statutory ability to review and challenge mergers. For clarity, we
collectively refer to the Commissioner and the Bureau as ‘the Bureau’.
3 RSC 1985, c 19 (2nd Supp).
4 Competition Bureau Performance Measurement & Statistics Report for the period ending
30 September 2018, https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04397.html
(2014–2018 statistics); Competition Bureau Quarterly Report for the period ending 31 March 2015, www.
competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03784.html (2013–2014 statistics) (collectively, the
Bureau Statistics Reports).
5 Per the Bureau Statistics Reports, the remaining 14 transactions (1.5 per cent) were abandoned either
due to competition issues or for reasons other than the Bureau’s position on the merger.
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Overview of the Canadian merger review process

Certain classes of merger transactions6 that exceed prescribed financial and, in the case of
equity transactions, equity thresholds7 are subject to mandatory pre-merger notification under
Part IX of the Competition Act. Part IX requires each party to the transaction to file a notifica-
tion form that provides information about the party and its Canadian operations, including the
names and contact information of the top 20 customers and suppliers for each relevant prin-
cipal category of product, and for both the notifying party and each affiliate that has a connec-
tion to Canada. Parties also customarily submit a joint White Paper (called an ARC request) to
the Bureau describing the transaction and its rationale, and the reasons why the transaction
will not result in a substantial prevention or lessening of competition, and requesting that
the Bureau issue either an advance ruling certificate8 (ARC) or a no-action letter9 (NAL) in lieu
thereof.10
The filing of the notification form triggers a 30-day suspensory waiting period under para-
graph 123(1)(a) of the Competition Act. As a matter of law, the parties may close the transaction
after the expiry of the 30-day waiting period, unless the Bureau issues a supplementary infor-
mation request (SIR). An SIR – an extensive request for documents and data similar to a Second
Request under the Hart–Scott–Rodino Antitrust Improvements Act of 1976 – extends the wait-
ing period until 30 days after both parties substantially comply with the SIR.11
The parties are legally in a position to close after the expiry of the relevant waiting period,
whether or not the Bureau has completed its review.12 This means the Bureau has no right to
unilaterally block a merger or impose a remedy. Rather, should the Bureau determine that a
merger or proposed merger ‘prevents or lessens, or is likely to prevent or lessen, competition
substantially’ (an SPLC), the Bureau may apply to the Competition Tribunal (the Tribunal),
6 The classes of transactions that may be subject to pre-merger notification are described in Section
110 of the Competition Act: asset acquisitions; voting share acquisitions; amalgamations; formation of
non-share joint ventures; and acquisitions of an interest in a non-corporate entity (e.g., a partnership).
7 The relevant thresholds can be found on the Competition Bureau’s website at www.competitionbureau.
gc.ca/eic/site/cb-bc.nsf/eng/02782.html.
8 An ARC exempts the parties from having to submit a notification under Part IX and, once issued,
prohibits the Competition Tribunal from issuing an order in respect of the merger on substantially
similar grounds upon which the ARC was issued. As a practical matter, the Bureau will issue an ARC in
only those transactions that raise no actual or potential concerns and where the Bureau has sufficient
information about the parties and relevant markets to arrive at that conclusion.
9 In a NAL, the Bureau will confirm that it does not intend, at that time, to apply for an order to block the
merger, but reserves its statutory right to do so within one year after closing. In practice, a NAL provides
a high degree of comfort to the merging parties.
10 It is also possible that the parties may elect to not file a notification to start the waiting period and
rather file an ARC Request asking for either an ARC or, in lieu thereof, a NAL and a waiver under
paragraph 113(c) of the Competition Act of the parties’ obligation to file a formal notification. This
strategy is typically reserved for non-complex mergers (i.e., where there is no or limited competitive
overlap) and where timing is not of the essence, since a waiting period is not started under this strategy.
11 See Competition Act s 123(1)(b). Note that the Bureau may terminate either the initial waiting period or
the post-SIR waiting period early.
12 Notwithstanding the legal ability to close, merging parties often contract to require substantive
clearance from the Bureau in the form of an ARC or NAL.
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Canada
which is a specialised competition court, for an order under Section 92 of the Competition Act.13
The Bureau may apply to the Tribunal to obtain such an order before or within one year after the
merger has been substantially completed.14
The Competition Act enumerates the types of orders that may be made by the Tribunal in
respect of a proposed or completed merger. Where the merger has been completed, the Tribunal
may order dissolution of the merger or disposal of assets and shares; where a merger has not yet
been completed, the Tribunal may order the parties not to complete the merger in whole or in
part, and may impose additional post-completion obligations that are necessary to ensure the
merger does not prevent or lessen competition substantially.15 That is, in a contested case the
Tribunal’s ability to order behavioural remedies is limited.
Alternatively, the Bureau and the merging parties may consensually agree upon a remedy
to address the SPLC, and that agreement can be memorialised in a consent agreement that is
registered with the Tribunal.16 A registered consent agreement has the same force in law as a
court order. Where the Bureau and parties are able to agree upon the terms of a consent agree-
ment, there is a great deal more leeway to design a remedy than what is otherwise available to
the Tribunal.
As set out in Section 92 of the Competition Act, the legal standard for a merger challenge is
that the merger will or is likely to result in an SPLC.17 Section 93 of the Competition Act sets out
the factors to be considered when making a determination that a merger will result in an SPLC,
including, among others, effective domestic and foreign remaining competition; the extent to
which acceptable substitutes are available; barriers to entry; likelihood that the merger would
remove a particularly vigorous and effective competitor; and change and innovation effects.18
The Competition Act also sets out a unique ‘efficiencies defence’ that provides that the Tribunal
may not make an order in respect of a merger where the merger ‘has brought about or is likely to
13 See Competition Act s 92(1)(e)–(f).

14 Note that under Section 92 the Bureau may challenge any merger within one year after closing, whether
or not pre-merger notification is required under Part IX. A notable recent example is Commissioner of
Competition v. CCS Corporation et al, 2012 Comp Trib 14, in which the Bureau challenged a completed
(non-notifiable) merger between two providers of hazardous waste disposal services in north-eastern
British Columbia. The Tribunal found that the completed merger was likely to prevent competition
substantially for the supply of secure landfill services for solid hazardous waste in that area, and
ordered the divestiture of a subsidiary of the acquired company. The Tribunal’s decision was later
overturned by the Supreme Court of Canada on the basis of the efficiencies defence under Section 96 of
the Competition Act. More recently, in 2019 the Bureau challenged the acquisition of Wrangler Holdings
Inc. by Thoma Bravo LLC, alleging a merger to monopoly and seeking a divestiture of all interests in
one of Thoma Bravo’s or Wrangler’s reserve valuation and reporting software businesses and all related
assets. While that transaction was notifiable, the parties had closed at the end of the applicable waiting
period, such that the Bureau’s challenge was made post-closing. At time of writing, the matter was still
before the Tribunal. See Commissioner v. Thoma Bravo, LLC, Competition Tribunal Case No. CT-2019-002
(Notice of Application, 14 June 2019), https://www.ct-tc.gc.ca/CMFiles/CT-2019-002_Notice%20of%20
Application_1_62_6-14-2019_4112.pdf.
15 Competition Act, ss 92(1)(e), (f).
16 Competition Act, ss 92(e)(iii) and 92(f)(iii).
17 Competition Act, s 92(1).
18 Competition Act, s 93. Section 92(2) of the Competition Act also explicitly provides that the
determination that a merger will or is likely to cause an SPLC may not be made solely on the basis of
concentration or market shares. Competition Act, s 92(2).
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Canada
bring about gains in efficiency that will be greater than, and will offset, the effects of any preven-
tion or lessening of competition . . . and that the gains in efficiency would not likely be attained
if the order were made’.19
The Bureau’s approach to merger review under Section 92 of the Competition Act is set out
in greater detail in its Merger Enforcement Guidelines.20
Merger remedies
Once the Bureau has determined that a transaction is likely to result in an SPLC, the merging
parties must consider whether they can – and want to – address the Bureau’s concerns through
a remedy or otherwise litigate the merger before the Tribunal on the merits. In Canada, the legal
test for a merger remedy is that ‘the appropriate remedy for a substantial lessening of competi-
tion is to restore competition to the point at which it can no longer be said to be substantially
less than it was before the merger.’21 That is, the remedy need not address all competitive harm
that may be caused by the transaction, but must reduce it to the point where it is no longer ‘sub-
stantial’. However, the remedy must entirely address the substantial harm to competition, as
stated by the Supreme Court of Canada: ‘if the choice is between a remedy that goes farther than
is strictly necessary to restore competition to an acceptable level and a remedy that does not go
far enough even to reach the acceptable level, then surely the former option must be preferred.
. . . If the least intrusive of the possible effective remedies overshoots the mark, that is perhaps
unfortunate, but from a legal point of view, such a remedy is not defective.’22
The structure of a remedy will largely depend on the facts of the case and the Bureau’s the-
ory of harm. The Bureau’s approach to remedies is set out in its Information Bulletin on Merger
Remedies in Canada.23 Regardless of the structure of the remedy, the Bureau requires that the
‘terms must be clear and measures must be sufficiently well defined’, both in order to facilitate
timely implementation and to allow for enforcement by the Bureau and the Tribunal.24
In the context of a merger review, the Bureau has demonstrated a willingness to limit the
remedy to the concern arising from the merger itself and not to broader concerns unrelated
to the merger. In such circumstances, the Bureau may initiate an investigation separate from
the merger while agreeing to a remedy to eliminate the SPLC. For example, when the Bureau
raised non-merger related Competition Act concerns about pricing strategies and programmes
used by Loblaws, a national Canadian grocer, after reviewing documents in the context of the
19 Competition Act s 96(1).

20 Competition Bureau Canada: Enforcement Guidelines – Merger Enforcement Guidelines (2011),
available at www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/vwapj/cb-meg-2011-e.pdf/$FILE/
cb-meg-2011-e.pdf.
21 Canada (Dir of Investigation and Research) v. Southam Inc [1997] 1 SCR 748 at para 85.
22 Southam at para 89.
23 Competition Bureau, Information Bulletin on Merger Remedies in Canada (22 September 2006),
www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02170.html (Remedies Bulletin).
24 Remedies Bulletin at para 8. See also Commissioner of Competition v. Parkland, 2015 Comp Trib 4 at para
43. (‘To accomplish their purpose, remedies in merger matters should be couched in clear terms and be
sufficiently well defined to be effective and enforceable.’).
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Canada
Loblaws/Shoppers Drug Mart merger, the Bureau negotiated a remedy to address concerns
relating to the merger and, post-merger, opened a separate investigation into Loblaws’ practices
under the abuse of dominance provision of the Competition Act.25
Types of remedies
Consistent with the general approach adopted by antitrust agencies worldwide, the Bureau has
stated a preference for structural remedies (i.e., those that change the structure of the market,
commonly through the sale of assets), noting that they are typically more effective, do not run
the risk of potentially constraining pro-competitive behaviour from the merged firm and do not
require extended monitoring by the Bureau.26 As stated in the Remedies Bulletin, ‘[s]tandalone
behavioural remedies are seldom accepted by the Bureau.’27 However, the Bureau has remained
willing to implement even a stand-alone behavioural remedy where it is ‘sufficient to eliminate
the substantial lessening or prevention of competition, and there is no appropriate structural
remedy’.28
Structural remedies
Structural remedies are most often implemented in horizontal mergers, where the increase in
concentration as a result of the merger can be remedied by carving certain assets out of the
merged company and selling them to a third party. The key consideration for a structural rem-
edy is that the divested assets remain in the market to act as a competitive constraint on the
merged firm. For this reason, the Bureau requires that (1) the assets must be viable competitive
assets and the divestiture sufficient to eliminate the SPLC (and cannot itself result in an SPLC);
(2) the divestiture must be timely; and (3) the assets must be sold to an independent buyer, who
intends to remain in the market and has the ability to be an effective competitor.29
A viable divestiture package may include all or a part of a stand-alone operating business,
but in all cases must include ‘all assets necessary for the buyer to be an effective long-term com-
petitor who will preserve competition in the relevant market(s)’.30 The extent of the assets to
be divested will depend on the nature of the business. In certain cases involving a stand-alone
business, this could require the merging parties to divest management, personnel, administra-
tive functions and supply arrangements, etc., required for the operating business to function;
25 See Lisa Wright, ‘Competition Bureau steps up probe into Loblaw’s dealings with suppliers,’ Toronto Star
(17 November 2014), www.thestar.com/business/2014/11/17/competition_bureau_steps_up_probe_into_
loblaws_dealings_with_suppliers.html. More recently, the Bureau announced in March 2018 that it
had commenced a review under the merger provisions of the Competition Act of a (non-notifiable) deal
involving the transfer of 41 community and daily newspapers between Postmedia and Torstar, and that
it was separately investigating alleged anticompetitive conduct contrary to the conspiracy provisions
of the Competition Act arising from the same transaction. Statement from the Commissioner of
Competition regarding searches in the greater Toronto area (12 March 2018), https://www.canada.ca/en/
competition-bureau/news/2018/03/statement-from-the-commissioner-of-competition-regarding-
searches-in-the-greater-toronto-area.html.
26 Remedies Bulletin at para 10.
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other cases, such as those involving divestiture of discrete assets that can be easily integrated
into the divestiture buyer’s existing business, may not require such an extensive remedy. Where
a proposed divestiture package involves less than a stand-alone business, or involves a combi-
nation of assets from both merging parties, the Bureau will typically give the proposed package
greater scrutiny in order to ensure that the package will be a viable business.31 In some cases,
this may involve ‘market testing’ of the proposed divestiture package through consultation with
competitors, customers and suppliers, and industry experts.32 For this reason, merging parties
may want to consider proposing the divestiture of a stand-alone business or business line from
one party rather than a ‘mix and match’ package.
Other remedies
Behavioural remedies
As described above, the Bureau’s preference is not to accept stand-alone behavioural remedies.
The Bureau is typically more willing to accept ‘combination’ remedies that include behavioural
elements alongside divestitures. Such behavioural commitments are intended to ensure that
the divestiture remedy is effective, typically by providing the buyer with the ability to operate
effectively as soon as possible post-acquisition.33 A recent example of a combination remedy
is McKesson/Katz Group, in which the Bureau required the purchaser to divest pharmacies in
26 markets and imposed restrictions on the transmission of competitively sensitive information
between the purchaser’s pharmaceutical wholesale business and the target’s retail business.34
Behavioural remedies will depend on the circumstances of the case and the Bureau’s theory
of harm. The following are examples of behavioural commitments the Bureau has accepted as
stand-alone or combination remedies:
• short-term supply arrangements for the buyer of the assets to be divested;35
• a waiver by the merged entity of restrictive contract terms to facilitate entry;36

34 Competition Bureau statement regarding McKesson’s acquisition of Katz Group’s healthcare business
(16 December 2016), www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04174.html. Similarly, in
Loblaws/Shoppers Drug Mart, which concerned the acquisition by a national grocery store of a national
pharmacy and drugstore chain, the purchaser was required to divest locations in 27 local markets, and
in addition to maintain pharmacy businesses in affected stores, and to cease certain conduct toward
existing suppliers. Commissioner v. Loblaw Companies Limited, CT-2014-003 (Consent Agreement), www.
ct-tc.gc.ca/CMFiles/CT-2014-003_Registered%20Consent%20Agreement_1_38_3-21-2014_1159.pdf.
35 In Transcontinental/Quebecor, Transcontinental was required to supply distribution and printing
services to any potential purchaser for a specified period to maximise the newspapers’ visibility.
Competition Bureau statement regarding the acquisition by Transcontinental of Quebecor Media’s
community newspapers in Quebec (28 May 2014), www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/
eng/03740.html. In Suncor/PetroCanada, the merged company was required to supply wholesale
gasoline to independent marketers after the merger. Commissioner of Competition v. Suncor Energy Inc
and Petro-Canada, CT-2009-011 (Consent Agreement) at para 24.
36 See Commissioner of Competition v. Superior Plus Corp and Superior Plus LP, CT-2017-015 (Consent
Agreement) (Superior Plus/Canwest) at para 43 (requiring merging parties not to enforce contract terms
providing for automatic renewal, exclusive supply or minimum volume requirements, or equipment
removal or other termination fees).
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• restrictions on anticompetitive bundling;37

• requirements to appoint independent directors to the board of the combined company38 or
restrictions on board participation in competing companies;39 and
• restrictions on pricing or margin.40
Other behavioural commitments are typically included as boilerplate in most divestiture con-
sent agreements, such as obligations to facilitate hiring of affected employees by the divestiture
purchaser; requirements to notify the Bureau of acquisitions in the affected product or geo-
graphic markets, even if notification is not required under Part IX of the Competition Act; and
restrictions on acquiring any interest in the divestiture assets for a period of time.41
The Bureau has been willing to implement stand-alone behavioural remedies in a limited
number of cases, in particular in vertical mergers or other scenarios (such as joint ventures)
where there is no, or limited, horizontal overlap but there is a risk of coordinated effects through
flow of confidential information between the parties. Most often, these remedies take the form
of administrative firewalls. In BCE/Rogers/Glentel, for example, the Bureau’s consent agreement
imposed administrative firewalls between the two purchasers, who were telecom competitors,
and the target, a wireless services retailer, to ensure that competitively sensitive information
did not flow between the telecom competitors.42 In Coca Cola/Coca Cola Bottling, the purchaser
agreed to restrictions on access to information of competing soft drink companies that was
held by the target bottling company.43
The Bureau will allow a behavioural remedy only where it requires either no or minimal
future monitoring by the Bureau.44 In certain cases, the Bureau will appoint a third-party moni-
tor to ensure compliance with the behavioural remedy.45 The Bureau’s continued willingness to
consider behavioural remedies (whether stand-alone or combination) where the competitive
37 See Commissioner of Competition v. Ticketmaster Entertainment Inc and Live Nation Inc, CT-2010-001
(Consent Agreement), at para 26.
38 See Commissioner of Competition v. Suncor Energy Inc and Petro-Canada, CT-2009-011 (Consent
Agreement) at para 66.
39 See Commissioner of Competition v. Quebecor Media Inc, CT-2005-010 (Consent Agreement), at
Schedule A.
40 See Competition Bureau statement regarding Le Groupe Harnois Inc’s proposed acquisition
of Distributions pétrolières Therrien Inc’s gasoline supply arrangements (23 June 2016), www.
competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04106.html.
41 See Competition Bureau Mergers Consent Agreement Template (29 September 2016), Sections VIII and
XI, www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04106.html.
42 Competition Bureau Statement regarding BCE and Rogers’ acquisition of GLENTEL (14 May 2015),
www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03924.html.
43 See Commissioner of Competition v. The Coca-Cola Company, CT-2010-009 (Consent Agreement) (Coca
Cola/Coca Cola Bottling), www.ct-tc.gc.ca/CMFiles/CT-2010-009_Registered%20Consent%20Agreement_
2_45_9-27-2010_5925.pdf.
45 See Commissioner of Competition v. BCE Inc and Rogers Communications Inc, CT-2015-005 (Consent
Agreement), Section V, www.ct-tc.gc.ca/CMFiles/CT-2015-005_Registered%20Consent%20Agreement_
2_38_5-5-2015_3215.pdf.
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issues cannot be addressed through divestiture alone differs somewhat from the approach in
the United States, where recent public statements suggest some scepticism from enforcers on
the utility of behavioural remedies.46
Quasi-structural remedies
In appropriate cases, the Bureau may also accept a ‘quasi-structural’ remedy, which changes the
structure of the market without requiring the merging party to divest ownership of a given asset.
Examples of quasi-structural remedies given in the Remedies Bulletin include ‘licensing intel-
lectual property’, ‘removing anti-competitive contract terms’ and ‘granting non-discriminatory
access rights to networks’.47 An example of a quasi-structural remedy in practice is Ontera/Bell
Aliant, in which the purchaser telecom company was required to lease facilities along a signifi-
cant portion of the target’s network to a third party, and to grant a third party a 20-year indefea-
sible right of use to the telecommunications ring south of Kapuskasing, Ontario.48
Strategic considerations
Pre-signing preparation
In complex transactions, the parties often will be able to anticipate that a remedy will be
required. The earlier the parties consider antitrust issues, the better able they will be to allocate
antitrust risk and plan for an effective remedy process at the appropriate time. Prior to signing,
experienced antitrust counsel should review precedent cases, in particular those in the same
or similar industries, and provide benchmarks against which to compare the case at hand. In
Canada, the best resources for precedents are consent agreements from prior transactions49 and
the Bureau’s published position statements.50 Because consent agreements under Section 105 of
the Competition Act do not require the Bureau to provide a competitive impact statement or
other summary of its analysis, these resources may be relatively fewer and less detailed than
precedents in other jurisdictions. For this reason, precedents from other jurisdictions, in par-
ticular the United States and the European Commission, also may be persuasive authority for
risk analysis and submissions to the Bureau.
46 See, e.g., Assistant Attorney General Makan Delrahim Delivers Keynote Address at American Bar
Association’s Antitrust Fall Forum, Washington, DC (16 November 2017), www.justice.gov/opa/speech/
assistant-attorney-general-makan-delrahim-delivers-keynote-address-american-bar (‘I believe the
Division should fairly review offers to settle but also be skeptical of those consisting of behavioral
remedies or divestitures that only partially remedy the likely harm. We should settle federal antitrust
violations only where we have a high degree of confidence that the remedy does not usurp regulatory
functions for law enforcement, and fully protects American consumers and the competitive process.’).
48 See Competition Bureau statement regarding the proposed acquisition of Ontera by Bell Aliant
(1 October 2014), www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03823.html.
49 Registered consent agreements can be found on the website of the Competition Tribunal, www.ct-tc.
gc.ca/CasesAffaires/CasesType-eng.asp#Consent.
50 Unlike in the United States, the Bureau is not required to issue a competitive impact statement
in respect of reviewed transactions, but from time to time the Bureau posts a position statement
summarizing its approach to a complex review on the its website, www.competitionbureau.gc.ca/eic/
site/cb-bc.nsf/eng/h_00173.html.
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A key initial consideration is which party will bear the antitrust risk posed by the transac-
tion. In most cases, the purchaser will want both post-closing certainty against a future chal-
lenge and to protect the value of the business by preserving its right to terminate the agreement
if the Bureau requires significant remedy commitments, or otherwise limiting the extent to
which it must agree to divestitures or other restrictive merger remedies. The vendor, by con-
trast, is likely to want to ensure that the transaction is completed regardless of the outcome of
the Bureau’s review, at least in an all-cash transaction.
In Canada, the parties’ statutory ability to close upon expiry of the relevant waiting period,
notwithstanding an ongoing substantive review, means that negotiation of the closing condi-
tion can be an effective tool to shift antitrust risk. Most purchasers will want to receive sub-
stantive comfort in the form of an ARC or NAL prior to closing, so that there is minimal risk of
a post-closing review or challenge. Vendors, by contrast, may wish to require the purchaser to
close the transaction as soon as it is legally permissible (even in the face of threatened litigation
by the Bureau).51
Merging parties in Canada (as in other jurisdictions) also may shift risk by way of transac-
tion covenants that relate to the parties’ obligations in respect of remedies. In many cases a
purchase agreement will require general ‘reasonable efforts’ by the purchaser to close a transac-
tion, without specific reference to antitrust remedies; in other cases, parties may negotiate an
open-ended ‘hell or high water’ covenant whereby a purchaser must take all necessary steps
to eliminate impediments to closing and obtain all required regulatory clearances, or instead
may specify the extent to which a purchaser must agree to a remedy if required by the Bureau
to avoid a challenge.52 Other means of shifting risk include reverse break fees, which require
the purchaser to pay a specified dollar amount to the target if the transaction is not completed
because of failure to obtain antitrust approvals, and ‘ticking fees’, or penalty fees that increase
with the length of time taken by the antitrust review.
Consent agreements and undertakings

Most merger remedies are implemented by way of consent agreement between the Bureau
and the purchaser or merging parties. Consent agreements are governed by Section 105 of the
Competition Act, which states that the consent agreement ‘shall be based on terms that could
be the subject of an order of the Tribunal against that person’.53 In Commissioner v. Kobo, the
Tribunal found that in order for a consent agreement to meet this standard, the consent agree-
ment must (1) sufficiently identify the elements of the relevant statutory test, and (2) explain
how the elements were met, and include a statement that the Bureau and the parties to the con-
sent agreement agree that these elements are met, or that the Bureau has determined that these
elements are met and the parties do not contest this conclusion.54 However, Section 105 does not
require the Bureau to provide the court with a competitive impact statement or other summary
of the basis for the Bureau’s conclusion.
Less commonly, the Bureau may accept an undertaking or other commitment without requir-
ing a consent agreement (according to the Bureau Statistics Reports, the Bureau has accepted
alternative case resolutions, including undertakings, in nine of the 40 ‘cases with issues’). Where
the Bureau accepts an alternative solution, such as an undertaking or commitment, typically it
53 Competition Act, s 105.

54 Rakuten Kobo Inc v. Commissioner of Competition, 2016 Comp Trib 11 at paras 51–52.
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will issue a qualified NAL. In GardaWorld/G4S Canada, the NAL issued to the parties was on the
basis of commitments by GardaWorld to alter certain contracting practices. The NAL also noted
the Bureau’s intention to monitor competitive dynamics post-merger.55 However, the Bureau’s
strong preference is to require a consent agreement enforceable as a court order.
Timing of remedy negotiations

As described above, the Bureau has no ability to unilaterally order a remedy or block a merger
under the Competition Act. Where the Bureau has identified that a transaction will likely cause
an SPLC, therefore, the Bureau will typically try to negotiate a remedy with the merging parties
to avoid the cost and delay associated with litigation.
In past practice, the Bureau would be willing to engage in a ‘dual-track’ review, in which it
would concurrently advance its substantive review of the proposed transaction while engaging
with the parties with regard to remedies. In recent experience, however, the Bureau may not be
willing to engage in remedy negotiations with parties until the case team has completed its sub-
stantive review. Even if merging parties identify to the Bureau the specific assets that they are
willing to divest at the outset of a case – even where the parties plan to divest one party’s entire
overlapping business in Canada – the Bureau will conduct a thorough review of the transaction.
In Holcim/Lafarge, for example, the parties publicly announced assets they were willing to divest
pursuant to the antitrust review process, including divesting Holcim’s entire business in Canada.56
The Bureau conducted a thorough review of the transaction to determine: (1) whether the transac-
tion would result in an SPLC; and (2) whether the initial remedy package was sufficient to address
the Bureau’s concerns. The Bureau determined that Holcim’s operations in Canada relied heavily
on certain US assets, and required Holcim to divest an additional plant in the United States.57
This example demonstrates why parties cannot rely on an upfront divestiture offer to
‘short-circuit’ the review process or to avoid an SIR in Canada. It is important to note that the
Bureau will not allow parties to close into a ‘hold separate’ solely in order to facilitate the com-
pletion of the Bureau’s review after closing.58 Accordingly, merging parties will want to leave
sufficient time for the Bureau to conduct a thorough review and to negotiate remedies prior to
the planned closing date. This may be of particular importance in global transactions where
timing of filings in multiple jurisdictions will have to be considered, so that timing in Canada
does not delay the global transaction.
In addition, it may benefit the parties to refrain from proposing remedies until the Bureau
has had time to review documents and data requested in the SIR and the parties better under-
stand the Bureau’s concerns. In particular, for merging parties wishing to raise an efficiencies
defence, allowing the Bureau to conduct a thorough analysis, including reviewing data and the
parties’ submissions and expert evidence in respect of competitive effects and efficiencies, can
55 Competition Bureau statement regarding the acquisition by GardaWorld of G4S Canada (13 March 2014),
56 See www.lafarge.com/en/holcim-and-lafarge-announce-a-list-proposed-asset-di
sposals-part-their-planned-merger#ixzz3ysgIaZJ6.
57 Competition Bureau statement regarding the proposed acquisition by Holcim of Lafarge (4 May 2015),
58 As discussed below, the Bureau will allow parties to close into a hold separate to facilitate a post-closing
divestiture or to facilitate litigation.
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reduce the scope of a remedy.59 In Superior Plus/Canexus, the Bureau determined that the trans-
action would result in an SPLC but cleared the transaction with no remedy on the basis that the
gains from efficiency resulting from the transaction ‘would be clearly greater than the likely
significant anti‑competitive effects of the transaction’.60 In Superior Plus/Canwest, the Bureau
engaged in a local-market-by-local-market competitive effects analysis and concluded that
no remedy was required in the 10 local markets where ‘the efficiency gains resulting from the
transaction were likely to clearly and significantly outweigh the likely anti-competitive effects
in these markets’; the Bureau required a divestiture remedy on the remaining 12 local markets
in which competitive effects were not outweighed by efficiency gains.61
Fix-it-first vs. post-closing remedies

The Bureau requires remedies to be implemented in a timely manner, in order to reduce uncer-
tainty and ‘[ensure] that competition is preserved as quickly as possible’.62 The Bureau’s stated
preference is for fix-it-first remedies, in which an upfront buyer is identified and the divestiture
is executed prior to or simultaneously with the merger.63 However, in practice, the Bureau typi-
cally will not require an upfront buyer, absent unique circumstances (such as concern about
identifying a suitable buyer, or the case where the divestiture is something less than an operat-
ing business and consists primarily of IP or other limited categories of assets). In cases where
an upfront buyer is identified and a purchase agreement executed prior to completion of the
merger, the Bureau will not always require the parties to execute a consent agreement.64
59 The Bureau’s approach to considering efficiencies was set out in a draft guideline document, ‘A
practical guide to efficiencies analysis in merger reviews’, which was published for public consultation
between 20 March and 3 May 2018. See www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04350.
html#section1_1 (‘Parties asserting an efficiency defence are encouraged to provide their initial
efficiencies submissions and available supporting information at an early stage, recognizing that
additional information will be required as the Bureau’s analysis progresses. This will allow the Bureau
sufficient opportunity to analyse potential effects and efficiencies concurrently.’). In July 2019, the
Bureau released a draft model timing agreement for merger reviews in which merging parties wish to
resolve efficiencies claims pre-closing (whether in service of remedy negotiations or otherwise), which
set out timed stages for engagement with the Bureau in order to ensure the Bureau is given sufficient
time to conduct its efficiencies analysis.
60 See Competition Bureau statement regarding Superior Plus’s proposed acquisition of Canexus
(27 June 2016), www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04111.html.
61 See Competition Bureau statement regarding Superior Plus LP’s proposed acquisition of Canwest
Propane from Gibson Energy ULC (28 September 2017), www.competitionbureau.gc.ca/eic/site/cb-bc.
nsf/eng/04307.html (‘As noted in the Merger Enforcement Guidelines, in appropriate cases and when
provided with timely information validating claimed efficiencies, the Bureau will consider efficiencies
internally and will not necessarily resort to the Tribunal for adjudication of the issue.’).
63 Remedies Bulletin at paras 28–29.
64 The Bureau issued a NAL in the ABInbev/SABMiller transaction after reviewing the concurrent
proposed divestiture of certain brands to Molson Coors. Competition Bureau statement regarding
Anheuser-Busch InBev’s proposed acquisition of SABMiller and the concurrent divestiture of certain
Miller Brands to Molson Coors (31 May 2016), www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/
eng/04097.html.
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The Bureau typically will allow parties to close the transaction under an agreement to ‘hold
separate’ certain assets in order to facilitate a post-closing divestiture. Such provisions are
desirable for the merging parties, as they can complete the transaction and begin integration
of the remainder of the businesses that will not be subject to the divestiture, and for the Bureau
as they ensure that the assets for divestiture will be preserved for the eventual buyer, and that
the merging parties will not integrate systems or share information that will make it difficult to
‘unscramble the eggs’ once the merger has been completed.
In certain scenarios, the Bureau will not require a full ‘hold separate’ but may allow the par-
ties to maintain or preserve the assets that may make up the divestiture package. Under such a
‘preservation order’, the vendor remains responsible for providing administrative support, hon-
ouring material contracts, and taking other actions that maintain the profitability and value of
the assets to be divested. A preservation order is typically appropriate where the assets are dis-
crete enough to be readily identifiable when the divestiture is implemented and when there is
a minimal risk of disclosing competitively sensitive information (which may be accomplished
through provisions of the consent agreement).65
Elements of the divestiture process

Where the Bureau allows parties to close into a hold separate, the Bureau will require the parties
to memorialise the agreement in a consent agreement that sets out in detail when and how the
remedy will be implemented.66 First, the divestiture vendor must provide reasonable commer-
cial representations and warranties to increase the attractiveness of the divestiture package.67
Second, the consent agreement typically will provide the vendor an initial sale period of
three to six months to sell the remedy package.68 If the vendor fails to complete the divestiture
within the initial sale period, the Bureau typically will appoint a trustee to complete the divesti-
ture, with no minimum price, and subject only to approval by the Bureau.69 There is, therefore, a
significant incentive for the merged entity to maximise value for divestiture assets by complet-
ing the sale within the initial sale period. Where there is uncertainty as to whether the remedy
will be completed, the Bureau may designate an additional package of assets as part of the rem-
edy (often referred to as a ‘crown jewel’ or ‘backstop’), whose inclusion may be triggered during
the trustee period to make it more likely that the remedy will be implemented.70
Other key elements of divestiture consent agreements include provisions for an independ-
ent manager to operate assets to be divested, pending sale of the assets;71 reporting require-
ments for the vendor to keep the Bureau informed of the status of the divestiture process;72 a

66 See, e.g., Parkland at paras 40–43 (endorsing the Bureau’s refusal to accept proposed divestiture
commitments that lack the detail typically found in a consent agreement). The Bureau’s template
consent agreement can be found on its website. See Competition Bureau Mergers Consent Agreement
Template (29 September 2016), www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02310.html.
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requirement to obtain any necessary third-party consents; and appointment of a monitor to

monitor compliance by the merging parties.73 Finally, the Bureau also must approve the dives-
titure buyer.74
Approval is based on the following criteria:
• the divestiture of the assets to the proposed buyer must not itself adversely affect competition;
• the buyer must be independent (i.e., at arm’s length) from the vendor;
• the buyer must have the managerial, operational and financial capability to compete effec-
tively in the relevant market or markets; and
• the asset or assets being divested must be used by the buyer to compete in the relevant mar-
ket or markets post‑divestiture.75
The Bureau also may approve multiple buyers if the divested assets are in multiple local or
regional markets, or if multiple products must be divested.76
International cooperation
The Competition Bureau’s International Affairs Directorate is tasked with supporting inter-
national collaboration, in particular by building relationships with foreign competition agen-
cies. In the merger review context, the Bureau often asks the parties to provide a confidential-
ity waiver to other reviewing agencies to facilitate cooperation in multi-jurisdictional merger
reviews.77 Such cooperation may take place through joint conference calls with the merging
parties or third parties; discussing industry dynamics and approaches to market definition and
competitive effects analysis; sharing documents and other information; and coordinating on
merger remedies.78 Given the close geographic and economic relationship between Canada and
the United States, the Bureau is especially likely to coordinate with the US antitrust agencies
on merger reviews that involve operations in both countries; indeed, in some cases the Bureau
73 Template Consent Agreement at Sections VI (third-party consents) and X (monitor).

74 Merging parties should note that the Competition Act does not exempt from the requirements of Part IX
acquisitions pursuant to a consent agreement with the Bureau; if a divestiture transaction exceeds the
applicable thresholds, the divestiture buyer and vendor will be required to comply with the pre-merger
notification regime.
76 Examples include Metro/PJC, in which property rights to five pharmacies were transferred to Familiprix,
with the remaining pharmacies subject to the consent order were transferred to McKesson. Competition
Bureau approves transfer of interests in 10 Quebec pharmacies from Metro to Familiprix, McKesson
(18 February 2019), https://www.canada.ca/en/competition-bureau/news/2019/02/competition-burea
u-approves-transfer-of-interests-in-10-quebec-pharmacies-from-metro-to-familiprix-mckesson.
html. In Abbott/Alere, one business was divested to Siemens AG and one business was divested to
Quidel Corporation. Competition Bureau statement regarding the acquisition by Abbott of Alere
(28 September 2017), www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04308.html.
77 The Bureau takes the position that Section 29 of the Competition Act allows communication with
other enforcers, under the provision allowing communication for ‘administration or enforcement’ of
competition legislation, and therefore typically will not require or accept a confidentiality waiver from
the parties to the Bureau.
78 See OECD Policy Roundtable on Remedies in Cross-Border Merger Cases, DAF/COMP(2013)28,
www.oecd.org/daf/competition/Remedies_Merger_Cases_2013.pdf.
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and the reviewing US agency may hold joint meetings. In the Bureau’s guidance on cooperation
in merger investigations with US agencies, for example, the Bureau notes that ‘both [agencies]
have an interest in reaching, insofar as possible, consistent analyses and outcomes’.79
In light of this approach, in certain cases the Bureau has not required a Canadian consent
agreement where the remedies required by other authorities also would resolve the competi-
tion issues in Canada. In UTC/Rockwell Collins, for example, the Bureau issued a qualified NAL
on the basis of the implementation of the settlement agreement between the parties and the US
Department of Justice.80 In GlaxoSmithKline/Novartis, the Bureau cooperated with both the US
FTC and the European Commission, and issued a NAL in respect of the transaction on the basis
that the consent agreement between the parties and the US FTC, in particular, the divestiture of
assets to Array BioPharma, was implemented.81 However, in cases where the Bureau is not satis-
fied that a foreign remedy would resolve competition issues in Canada, the Bureau may impose
a separate Canadian remedy.82 Similarly, in certain cases differences between the substantive
provisions of foreign and Canadian antitrust legislation can result in divergent outcomes, as in
Superior/Canexus, which was cleared in Canada on the basis of the efficiencies defence, but was
ultimately abandoned in the face of a challenge by the US FTC.83
79 Canada-US merger working group – Best practices on cooperation in merger investigations

(25 March 2014), www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03704.html.
80 Competition Bureau statement regarding United Technologies Corporation’s acquisition of Rockwell
Collins, Inc. (1 October 2018). The Competition Bureau took the same approach in Continental/Veyance.
Competition Bureau statement regarding the acquisition by Continental of Veyance (11 December 2014),
81 Competition Bureau statement regarding the three-part inter-conditional transaction between
GlaxoSmithKline plc and Novartis AG involving their consumer healthcare, vaccines and oncology
businesses, (23 February 2015), www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03874.html.
82 For example, in Praxair/Linde, the Bureau’s consent agreement required the divestiture of Linde’s entire
Canadian business, which formed part of the parties’ Americas divestiture package, including assets
in the US that were subject to a consent agreement with the United States Federal Trade Commission.
Competition Bureau statement regarding the proposed merger between Linde AG and Praxair, Inc.
(26 October 2018), https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04400.html. Similarly, in
Dow/Dupont, the Bureau’s consent agreement required divestiture of certain facilities that were also the
subject of divestiture commitments with the US and European agencies. Competition Bureau statement
regarding the merger between Dow and Dupont (27 June 2017), www.competitionbureau.gc.ca/eic/
site/cb-bc.nsf/eng/04247.html. Similarly, in Novartis/Alcon, the Bureau determined in cooperation
with European and American authorities that different competitive conditions existed in different
jurisdictions. As a result, each jurisdiction required a different set of divestitures, and the Bureau
entered into a Canadian consent agreement with the parties. OECD Policy Roundtable on Remedies in
Cross-Border Merger Cases, DAF/COMP(2013)28, www.oecd.org/daf/competition/Remedies_Merger_
Cases_2013.pdf.
83 See Competition Bureau statement regarding Superior’s proposed acquisition of Canexus (27 June 2016),
www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04111.html (‘In conducting its review, the Bureau
cooperated closely with the United States Federal Trade Commission (FTC). Each authority reviewed
the effects of the transaction under its distinct legal framework. On 27 June 2016, the FTC filed an
administrative complaint challenging the transaction.’).
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Conclusion
In most cases in Canada, a remedy will not be required in order to obtain an ARC or NAL or to
otherwise avoid litigation. However, in the few cases that do raise substantive competition con-
cerns, counsel can expect that the Bureau will conduct a thorough analysis to determine the
scope of the SPLC that will result from the transaction and, if there is a resulting SPLC, the scope
of the remedy necessary to address the substantial harm to competition likely to result from the
merger. This process requires a well-considered strategy to manage timing and other considera-
tions (particularly in global deals). Experienced competition counsel can help smooth the road
for merging parties facing remedy negotiations in Canada.
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18
China
Yi Xue (Josh)1
Introduction
The Antimonopoly Law of the People’s Republic of China (AML), the legal basis for Chinese
merger control, was passed on 30 August 2007 and came into force on 1 August 2008. Over the
course of the next decade, Chinese merger control saw significant progress: the antimonopoly
law enforcement agency reviewed more than 2,500 filings of concentration of undertakings,
with a total transaction value of more than 40 trillion yuan.2
Notably, in 2018 – the 10th anniversary of the implementation of the AML – the State
Administration for Market Regulation (SAMR) was officially inaugurated. The new
Antimonopoly Bureau of SAMR integrates the antimonopoly responsibilities of the National
Development and Reform Commission (NDRC), the Ministry of Commerce (MOFCOM), and the
State Administration for Industry and Commerce (SAIC), responsible for unified antimonopoly
law enforcement, including the antimonopoly review on concentrations of undertakings.
This chapter provides a practical guide on merger remedies to address any anticompetitive
concerns resulted from complicated merger filing cases in China.
Overview of the Chinese merger control process

A concentration triggers a filing requirement to the SAMR only if certain turnover thresholds
are met, and the merging parties are required to notify the SAMR before the implementation of
the concentration. After receipt of the notification, the SAMR makes supplemental information
requests to the merger parties. The clock for review will not start to run until the SAMR declares
the materials and information submitted by the merger parties are complete and formally
accepts the case, after which, Phase 1 proceedings are initiated. The SAMR then has 30 cal-
endar days for an initial assessment of the merger. If SAMR cannot clear the merger within
Phase 1 review, it can initiate a more in-depth review (Phase 2 review), which may take up to
1 Yi Xue (Josh) is a partner at Zhong Lun Law Firm.
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90 calendar days. The Phase 2 review can be extended for a further 60 calendar days (extended
Phase 2 review) in exceptional circumstances or with the parties’ consent. However, some con-
ditional clearance decisions show that the SAMR can in practice take a longer time than the
maximum statutory review period of 180 days to finish the review. This is the case, for example,
where the SAMR is running out of the time to complete its review owing to complex remedy
negotiations. In such a case, the notifying party may need to agree to withdraw and re-file the
notification, which restarts a further 180-day review period.
When reviewing concentration of undertakings, the SAMR considers the following factors
as provided in Article 27 of the AML:
(1) market shares and controlling power of the relevant market of undertakings
to concentration; (2) degree of concentration of relevant market; (3) impact of the
concentration of undertakings on market entry and technical progress; (4) impact
of the concentration of undertakings on consumers and other relevant undertak-
ings; (5) impact of the concentration of undertakings on the national economy;
and (6) other factors which have an impact on market competition and that the
anti-monopoly enforcement agency designated by the State Council deems should
be considered.
Merger remedies
Grounds of imposition of remedies
Article 28 of the AML states the grounds for imposition of remedies in merger control review:
For a concentration of undertakings that has or may have an eliminating or

restrictive effect on competition, the anti-monopoly enforcement agency des-
ignated by the State Council shall issue [a] decision to prohibit the concentra-
tion of undertakings. However, if the undertakings can demonstrate that the
pro-competitive effect of the concentration on competition clearly outweighs the
anti-competitive effect, or that the concentration contributes to the social public
welfare, the anti-monopoly enforcement agency designated by the State Council
may issue a decision not to prohibit the concentration.
Under such premise, Article 29 stipulates that ‘[f]or a concentration of undertakings not to be
prohibited, the anti-monopoly enforcement agency designated by the State Council may issue a
decision to impose restrictive condition(s) to lessen the anti-competitive effect of the concentra-
tion on competition.’ 3
In addition to the AML, the SAMR enacted the Trial Provisions on Imposing Restrictive
Conditions on Concentration of Undertakings (the Trial Provisions). This is a more specific
set of regulations focusing on remedy imposition in China. Similar to Article 29 of the AML,
Article 2 of the Trial Provisions reinstates the right of SAMR to attach restrictive conditions (i.e.,
remedies), and the purpose of remedies is to mitigate the anticompetitive effect on competi-
tion brought by concentrations. The Trial Provisions outline a basic structure and aspects that
3 Emphasis added.
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should be followed or covered by remedies, including types, determination, implementation,

supervision, post-decision modification and removal. The contents will be introduced in the
corresponding sections below.
Notably, the review standards specified by the AML include not only competition-related
factors of a transaction, but also public interests and the impact on the development of the
national economy. To take into account public interests and the impact on the development
of the national economy in its review of concentrations of undertakings, the SAMR consults
with stakeholders, including other government agencies regulating the industry involved, trade
associations, key suppliers and customers, and sometimes competitors on their view of the
potential impact of the concentration. This often leads to unique concerns to be identified in
China, usually driven by complaints of stakeholders. Sometimes the complaints by stakehold-
ers are not competition-specific, yet the SAMR and the parties have to address those concerns
in the AML regime by agreeing upon remedies – mostly behavioural.
In practice, merger control review has become increasingly sophisticated in China in recent
years. Since the AML came into force, MOFCOM and the SAMR have announced 40 conditional
clearances up to June 2019. According to the SAMR, it received 513 notifications in 2018, out of
which 468 were concluded.4 In particular, the SAMR imposed remedies in four cases in 2018 –
fewer than in the previous year, which saw seven cases with conditions.
Key principles underlying merger remedies

Similar to other jurisdictions, the merger remedies in China centre around the SAMR’s concerns
for the transaction. Normally, at the late stage of its review, the SAMR convenes a meeting with
the parties and their counsel to express any competition concern they have identified verbally.
The parties will then be under the obligation to propose remedies to address the competition
concerns. The SAMR will assess the remedy proposal and bring it to market test with the stake-
holders. If the feedback is positive from all stakeholders, the SAMR will clear the transaction
with the proposed remedies imposed.
The AML requires the SAMR to publicise conditional clearance to the public in a timely
manner. Parties will have the chance to review the decision before the announcement to ensure
no business secret or confidential information is mentioned. In practice, conditional clearance
will also be accompanied by a non-confidential version of the merger remedies, but the enforce-
ment will be based on the full version.
As explained above, Articles 27 and 28 of the AML set forth the factors and standards for
merger control review and finding competition concerns. For such review, the SAMR consid-
ers a number of factors, including market shares, market control power, concentration, impact
on market entry and technological progress and impact on other undertakings. In practice, the
SAMR’s review is still rather pro forma in many aspects. Market shares (including other param-
eters calculated based on market shares such as the Herfindahl-Hirschman index) still have the
most weight in its review, although it does also consider other factors. As noted above, in addi-
tion to these factors, the SAMR takes into account and gives weight to the feedback it receives
from the key stakeholders in its consultation process to assess the possible impact on public
interests and the national economy.
4 See speech made by Gan Lin on National Market Supervision System Antitrust Work Conference,
9–10 May 2019, www.saic.gov.cn/xw/zj/201905/t20190509_293491.html.
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This tendency leads to several distinctive features in terms of identifying competition con-
cerns and imposing remedies with regard to global concentrations in China. Notably, although
a concentration has been deemed to raise no competition concern in other major jurisdictions,
the SAMR may identify competition concerns based on either the distinctive market dynam-
ics and competitive landscape in China, or negative feedback from stakeholders in China. This
is particularly true in China’s sensitive sectors, such as agriculture, semiconductors, mining,
hi-tech and certain consumer goods.
Further, the concerns formulated based upon stakeholders’ feedback generally tend to
be vague and broad, and often lead to behavioural remedies. Therefore, on its face, the SAMR
seems to have a preference for behavioural remedies, as pointed out by many media reports.
The most recent five cases conditionally cleared by the SAMR since 2018 all involved behav-
ioural remedies. The most typical remedy is commitment not to engage in tying and bundling.
Remedies in the context of multi-jurisdictional mergers

The SAMR has entered into more than 50 international antitrust cooperative documents with
competition agencies in 30 jurisdictions,5 including a number of key competition authori-
ties, for instance, the European Commission, the US Department of Justice and Federal Trade
Commission, the Japan Fair Trade Commission, the Competition Commission of South Africa,
the Federal Antimonopoly Service of Russia, and the Competition Authority of Kenya. In
high-profile global mergers, the SAMR often requires the parties to provide waiver for it to com-
municate with other jurisdictions – most commonly the European Union and the United States,
and in some cases other major jurisdictions such as India, Japan and Brazil. It is understood
that during such conversations, the SAMR will exchange views on the review process, compe-
tition concerns identified, theory of harm and possible remedies with their counterparts in
these jurisdictions.
In practice, the SAMR’s decision is usually in line with the decisions of other key competi-
tion authorities, in particular with regard to the scope of remedies. However, it is not uncom-
mon for the SAMR to identify specific competition concerns based on the market dynamics
and competitive landscape in China (particularly where the geographic market is national) or
based on the feedbacks from the relevant Chinese stakeholders, since, as explained above, the
SAMR also evaluates the impact of a transaction on public interests and the development of the
national economy.
Types of remedies
As in other jurisdictions, in China the Trial Provisions set forth three types of remedies: struc-
tural, behavioural and hybrid. Structural remedies mostly refer to divestiture, which is also the
focus of the Trial Provisions. The Trial Provisions cover many aspects of divestiture, including
the definition, scope, review standards, crown jewel clause, implementation, purchaser crite-
ria, divestiture and monitoring trustee, and review clauses. Further, the Trial Provisions also
state the circumstances where the SAMR can request for an upfront buyer divestiture. Fix-it-
first divestiture is not expressly specified in the Trial Provisions but has been adopted by the
5 See Lin Hang: Antitrust Law is a Common International Language, Competition Policy Forum 2018,
http://finance.ifeng.com/a/20180801/16420989_0.shtml.
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SAMR in practice. The SAMR usually accepts fix-it-first divestiture if the parties propose to
divest a certain business to a certain buyer at the very early stage of the notification (i.e., before
the SAMR raises its competition concerns to the parties). If the proposed fix-it-first divesture
constitutes another notifiable concentration, the transaction in relation to the fix-it-first dives-
ture shall be notified to and cleared by the SAMR.
However, as noted above, it is widely recognised that the Chinese competition author-
ity appears to have a stronger preference for behavioural remedies than any other competi-
tion authority. Out of the 40 transactions conditionally approved by the SAMR (and formerly
MOFCOM), 35 cases involved behavioural remedies (among the 35 cases, behavioural remedies
were only imposed in 22 cases, while the other 13 involved both structural and behavioural
remedies).
The conditional approvals made by the SAMR thus far and the types of remedies imposed
on each case are listed below.
No. Name Date Remedies

1 KLA-Tencor Corporation/ Orbotech Ltd 13 February 2019 Behavioural
2 United Technologies Corporation/Rockwell 23 November 2018 Structural and behavioural

Collins, Inc
3 Linde AG/ Praxair, Inc 30 September 2018 Structural and behavioural
4 Essilor International/ Luxottica Group SpA 25 July 2018 Behavioural
5 Bayer/Monsanto 13 March 2018 Structural and behavioural
6 BD/Bard 27 December 2017 Structural
7 Advanced Semiconductor/Siliconware 24 November 2017 Behavioural
8 Maersk Line/Hambur Süd 7 November 2017 Behavioural
9 Agrium/Potash 6 November 2017 Structural and behavioural
10 HP/Samsung 5 October 2017 Behavioural
11 Broadbom/Brocade 22 August 2017 Behavioural
12 Dow/DuPont 29 April 2017 Structural and behavioural
13 Abbott/St. Jude Medical 30 December 2016 Structural
14 Anheuser Busch InBev/SAB Miller 29 July 2016 Structural
15 Freescale/NXP 25 November 2015 Structural
16 Alcatel-Lucent/Nokia 19 October 2015 Behavioural
17 Corun New Energy/Toyota JV 2 July 2014 Behavioural
18 AZ Electronic/Merck 30 April 2014 Behavioural
19 Nokia/Microsoft 8 April 2014 Behavioural
20 Life Technologies/Thermo Fisher Scientific 14 January 2014 Structural and behavioural
21 MStar Semiconductor/MediaTek 26 August 2013 Behavioural
22 Gambro/Baxter 8 August 2013 Structural and behavioural
23 Gavilon/Marubeni 22 April 2013 Behavioural
24 Xstrata/Glencore 16 April 2013 Structural and behavioural
25 ARM/Gemalto/Giesecke & Devrient JV 6 December 2012 Behavioural
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No. Name Date Remedies

26 Yihaodian/Wal-Mart 13 August 2012 Behavioural
27 Goodrich/United Technologies 15 June 2012 Structural and behavioural
28 Motorola Mobility/Google 19 May 2012 Behavioural
29 Hitachi/Western Digital 2 March 2012 Structural and behavioural
30 Henkel Hong Kong/Tiande JV 9 February 2012 Behavioural
31 Samsung’s HDD Business/Seagate 12 December 2011 Behavioural
32 General Electric/Shenhua JV 10 November 2011 Behavioural
33 SAVIO/Alpha V 31 October 2011 Structural
34 Silvinit/Uralkali 2 June 2011 Behavioural
35 Alcon/Novartis 13 August 2010 Behavioural
36 Sanyo/Panasonic 30 October 2009 Structural and behavioural
37 Wyeth/Pfizer 29 September 2009 Structural and behavioural
38 Delphi/General Motors 28 September 2009 Behavioural
39 Lucite/Mitsubishi Rayon 24 April 2009 Structural and behavioural
40 Anheuser-Busch/InBev 18 November 2008 Behavioural
The behavioural remedies imposed in the cases above include commitments:

• to hold separate (some argue that this is a quasi-structural remedy);
• not to raise prices;
• not to discriminate against Chinese customers;
• to ensure supply;
• to comply with the FRAND principles (not only relating to the license of standard essential
patents, but also, in a couple of cases, relating to the supply of physical goods); and
• not to engage in tying or bundling, or any other abusive conducts.
As noted above, the ‘no tying or bundling’ commitment has become increasingly common in
the high-profile mergers involving complementary product portfolios reviewed by the SAMR.
This is partially because the SAMR’s review places a lot of weight on market shares. Therefore, if
the SAMR sees high market shares of the parties, even if there is no overlap, one concern it may
raise is that the parties could potentially tie or bundle the products with high market shares
with other products. Another reason is the complaints raised by stakeholders are often vague
and broad, and sometimes not competition-specific. These may sometimes be interpreted as
conglomerate concerns in order to be addressed within the AML regime.
Remedy negotiations
It is a fairly dynamic process for the parties to negotiate with the SAMR on the remedies after
they have submitted the remedy proposal on the basis of the competition concerns identified by
the SAMR. Starting from identification of concerns, this process in general can be dissembled
into the following phases.
First, as noted above, the SAMR normally verbally shares its competition concerns over the
transaction with the parties in a face-to-face meeting at a late stage of the review. Usually this
meeting will be held after the parties have provided all the required data and information in
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the various rounds of information requests. Before the meeting, the SAMR will also ensure that
it has received feedback from the key stakeholders that it has consulted with for the transac-
tion. In addition, for global mergers, the SAMR also tends to align with other major competition
authorities before the meeting.
Second, the parties will need to propose remedies to address the concerns raised by the
SAMR. In exceptional cases, the remedy proposal could also be submitted before competition
concerns were declared by the SAMR for the sake of timing. The SAMR may or may not review
the proposal in such cases. Given that the Trial Provisions provide little guidance in terms of
whether and how a proposal should be evaluated, there is a lot of space for the SAMR and the
parties to bargain and agree on a mutually satisfactory remedy proposal. A balance often has to
be struck between timing and scope of the remedy. A general principle is that the more the par-
ties want to limit the scope, the more time they should allow for negotiations with the SAMR.
Third, after the SAMR is satisfied with the remedy proposal, it will bring the proposal to mar-
ket test by sharing the non-confidential version with the stakeholders. The stakeholders will
review the proposal and come back with their comments. If the stakeholders indeed raise com-
ments, the SAMR will convey those to the parties and request them to further adjust the remedy
proposal. Sometimes the comments can be very specific (e.g., on wordings or time period). If, on
the contrary, all the stakeholders provide positive feedback, the SAMR could proceed with the
internal procedures for clearance.
This dynamic process can be time-consuming, and estimating the time frame can be diffi-
cult. It is, however, important to note that, in practice, the SAMR will request for ‘pull-and-refile’
when it perceives that a decision cannot be reached in 180 days. This will restart the clock of
180 days. In fact, pull-and-refile has been observed as an increasing trend. All five cases con-
ditionally approved in 2018 and the first half of 2019 were required to ‘pull-and-refile’. From
the notification date to the clearance date, the review processes of the above five cases lasted
between 291 days and 428 days.
Process and implementation

After a remedy proposal is accepted by the SAMR through the above process, the SAMR will pro-
ceed with its internal procedures for clearance, including, among others, preparing and drafting
its decision. During that process, the SAMR may frequently request some additional informa-
tion. Once the internal procedures are fulfilled, the SAMR will issue its decision of the case and
publicise it on its official website.
As noted above, normally the parties are given the opportunity to review the decision of
the SAMR before announcement in order to confirm that no business secrets or commercial
confidential information is included in the announcement. In practice, conditional clearance
will also be accompanied by a non-confidential version of the final remedy proposal, but the
enforcement will be based on the full version.
After the decision is announced, the parties will go through the monitoring trustee selec-
tion process with the SAMR. After that, the parties will prepare and submit a detailed imple-
mentation plan (DIP) for the SAMR’s review and approval. The monitoring trustee will also pro-
duce its own DIP on how to monitor the implementation of the compliance. The DIPs provide
the SAMR, the monitoring trustee and the parties with a comprehensive plan on the implemen-
tation and monitoring of the remedies finally approved by the SAMR. For example, the parties
would have to provide the SAMR with a reasonable approach to comply with commitments not
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China
to raise prices or not to discriminate against Chinese customers, and the monitoring trustee
will come up with manners to supervise the implementation accordingly. This process is espe-
cially important where behavioural remedies are involved.
In relation to structural remedies, the parties will also need to submit a list of proposed pur-
chaser candidates for the SAMR’s selection and approval. According to the Trial Provisions, the
list should contain at list three candidates for the SAMR to choose from. The SAMR can be very
strict in complying with such formalities. Given the different timelines often followed by com-
petition authorities around the world, one major concern shared by many companies in such
process is whether the SAMR will ultimately choose a different purchaser from other jurisdic-
tions where the process moves faster. Therefore, a condition precedent on the SAMR’s approval
is often included in the sale and purchase agreement entered into with the buyer selected. In
practice, although the SAMR tends to insist on the formality requirement for three candidates,
it has never chosen a different buyer if one has been determined in other jurisdictions.
In addition, the Trial Provisions set forth the time frame for divestitures. In principle, the
first divestiture period would last for six months and the SAMR may extend it by three more
months upon the parties’ application. It is followed by the six-month second divestiture period,
or trustee divestiture period, during which the divestiture trustee will take over the responsibil-
ity of implementing the divestiture. For behavioural remedies, the time frame depends solely
on the final remedies proposal.
Compliance
The implementation and compliance with structural remedies are more straightforward and
generally consistent with other jurisdictions. For the implementation of behavioural remedies,
the relevant documents that the parties need to bear in mind include: (1) the decision of the
SAMR; (2) the final remedy proposal of the parties (which is usually approved by the SAMR
as part of its decision); and (3) the DIP. The parties will have to implement and comply with
the remedies and these documents. In particular, the DIP contains the detailed and specific
contents on the scope of commitment, the measures to enforce and the standards to monitor.
In practice, the most common approach adopted by the SAMR and the monitoring trustee to
inspect the compliance of the parties is to require the parties to produce periodical compli-
ance reports.
The monitoring trustee may also take other actions to ensure compliance by the parties,
including on-site examination, requests for information, meeting with the parties and regular
contact with stakeholders. As such, complaints by stakeholders on any non-compliance by the
parties will have a formal channel to SAMR through the monitoring trustee and would be sub-
ject to further investigations by the SAMR. Therefore, the parties will have to work closely with
the monitoring trustee when the merger remedies are in effect.
From publicly available information, it appears that non-compliance with remedies seldom
occurs in China. To date, the SAMR has issued administrative sanctions in two cases, namely
Western Digital/Hitachi (2012) and Thermo Fisher/Life Technologies (2014). According to the
SAMR’s decisions, Western Digital violated its hold-separate obligation twice, while Thermo
Fisher failed to provide a sufficient level of discounts to Chinese customers as set forth in its
remedy proposal. The SAMR fined Western Digital 600,000 yuan in total, and Thermo Fisher
150,000 yuan.
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Modification and lift of conditions

Chapter 5 of the Trial Provisions sets forth the provisions on modification or removal of merger
remedies based on the parties’ application.
Article 27 of the Trial Provisions provides for factors to be taken into account. These include:
(1) significant change on parties to the concentration; (2) substantive change on competi-
tive conditions in the relevant market; and (3) unnecessity or unfeasibility for implementing
the remedies.
There have been a few cases where the parties successfully applied for modification or lift of
remedies. For example, in 2018, the SAMR approved the remedies imposed in Henkel/TDChem/
JV (2012) based on a change to the parties to the concentration and unnecessity or unfeasibility
for implementing the remedies, as Henkel exited from the joint venture. In addition, in 2018,
the SAMR also approved the application to lift the remedies imposed in MediaTek/MStar (2013)
based on substantive change on competitive conditions in the relevant market as the parties’
combined market share had decreased from 80 per cent to less than 50 per cent.
In practice, despite the MediaTek/MStar precedent, it is generally difficult for the parties
to apply for modification or lift of remedies based on change of competitive conditions, par-
ticularly in more traditional and mature industries where the market shares of players tend to
be stable. As such, the recent common practice is for the parties to explicitly include a sunset
clause in a remedy proposal setting out the effective period and expressly stipulating that the
remedy will automatically expire after that.
Conclusion
A significant number of conditional approvals have been granted by the SAMR (and formerly
MOFCOM) since the implementation of the AML. By observing those conditional clearances, we
may conclude the general trends in merger remedies cases in China.
The SAMR is actively engaging with other antitrust authorities to coordinate global rem-
edies packages when dealing with the international transactions with competition concerns.
However, the remedies with Chinese characteristics were not uncommon in the previous rem-
edies cases. It is foreseen that where public interest or industry policy-related issues specific
to the Chinese market arose, the SAMR will be likely to impose additional remedies to address
these specific issues.
The SAMR has shown a strong preference to imposing behavioural remedies with a view to
preventing abusive behaviours that might happen after the merger. The behavioural remedies
usually include a series of commitments specific to each case, such as supplying at reasonable
prices, not engaging in exclusive behaviours, and no tying or bundling.
The time taken for the SAMR to review these filings involving remedies also varies consider-
ably from case to case. Parties to a potential remedies transaction should therefore be prepared
for a degree of uncertainty when it comes to the merger review time frames in China. It is highly
recommended that the parties to the transaction with potential competition concerns to plan
the proposal for remedies at early stage. In our practice, it was feasible for the parties to secure
clearance by fix-it-first divesture. The parties could bring its proposal at the beginning of the
notification to speed up the merger review process.
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19
India
John Handoll, Shweta Shroff Chopra and Aparna Mehra1
Introduction
This chapter addresses some salient features of the law relating to remedies in merger cases
in India.
Competition law in India is governed by the Competition Act 2002 (the Act) and a number of
regulations. Section 5 of the Act states that acquisitions, mergers and amalgamations crossing
specified assets or turnover thresholds (collectively referred to as ‘combinations’) must be noti-
fied in advance to the Competition Commission of India (CCI). Detailed provisions on the han-
dling of notifications are contained in the Procedure in Regard to the Transaction of Business
Relating to Combinations Regulations 2011, as last amended in October 2018 (the Combination
Regulations). Section 6 of the Act prohibits entry into a combination that causes or is likely to
cause an appreciable adverse effect on competition within the relevant market in India. Such
combinations are void under the Act.
Since the Indian merger control regime came into force in June 2011, there have been (at
the time of writing) over 750 filings. To date, no combination has been prohibited. The vast
majority of notified combinations have raised no competition concerns. However, in a small
number of cases – around 35 to date – remedies (referred to as ‘modifications’ in the Act) have
been required in order to secure clearance in Phase I, or, after investigation, in Phase II. All of
these cases may be found in the ‘Combinations’ part of the CCI’s website.2 There has been an
active use by the CCI of its power to require remedies to address competition concerns before
1 John Handoll is a senior adviser and Shweta Shroff Chopra and Aparna Mehra are partners, at Shardul
Amarchand Mangaldas & Co.
2 www.cci.gov.in.
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India
clearance. Ten cases have involved divestiture to address horizontal overlap concerns,3 with one
of these – Bayer/Monsanto – also including non-structural remedies.4 In the recent Schneider
Electric case, non-structural remedies alone were, unusually, used to address horizontal over-
lap concerns.5 One case, PVR, involved the exclusion of certain business from the scope of the
proposed combination.6 Seven cases have involved using non-structural remedies to address
access concerns,7 spillover effects8 and consumer protection issues.9 Sixteen cases have been
exclusively concerned with non-compete clauses.10
Some of the cases have involved global mergers subject to review in multiple jurisdictions.11
The multi-jurisdictional elements have generally not been addressed in the CCI’s published
orders. However, in Dow/DuPont12 and Linde/Praxair13 the CCI found that a remedy accepted by
the European Commission would address an Indian appreciable adverse effect on competition
(AAEC) concern. The CCI often pays regard to practice elsewhere in designing remedies.14 The
CCI expects the parties to keep it abreast of developments in other jurisdictions. It will engage
with other competition authorities and it frequently seeks waivers from the parties allowing it
to do so.
After an outline of the applicable procedures, this chapter addresses the way in which the
CCI has addressed competitive harm in its choice of remedies. The main elements of divestiture
remedies are briefly addressed. The framework for securing compliance with modifications is
then considered.
3 Cases C-2014/05/170 Sun/Ranbaxy (5 December 2014) (and see continuation order of 17 March 2015),
C-2014/07/190 Holcim/Lafarge (30 March 2015) (and see supplementary order of 2 February 2016),
C-2014/10/215 ZF Friedrichshafen (24 February 2015), C-2016/05/400 Dow/DuPont (8 June 2017),
C-2016/08/418 Abbott Laboratories (13 December 2016), C-2016/08/424 China National Agrochemical
Corporation (16 May 2017), C-2016/10/443 Agrium/PotashCorp (27 October 2017), C-2017/06/519 FMC
(18 September 2017), C-2017/08/523 Bayer/Monsanto (14 June 2018) and C-2018/01/545 Linde/Praxair
(6 September 2018).
4 Case C-2017/08/523 Bayer/Monsanto (supra, n. 3).
5 Case C-2018/07/586 Schneider Electric (18 April 2019).
6 Case C-2015/07/288 PVR (4 May 2016).
7 Cases C-2012/11/88 GSPC Distribution Networks (8 January 2013), C-2014/04/164 Mumbai International
Airport (29 September 2014) and Bayer/Monsanto (supra, n.3).
8 Case C-2016/11/459 Nippon Yusen Kabushiki (29 June 2017) and C-2018/09/601 Northern TK Venture
(29 October 2018).
9 Case C-2016/12/463 Dish TV/Videocon (4 May 2017) and C-2018/10/609, C-2018/10/610 Jio (21 January 2019).
10 Cases C-2012/09/79 Orchid Chemicals (21 December 2012), C-2013/04/116 Mylan (20 June 2013),
C-2014/01/148 Torrent Pharmaceuticals (26 March 2014), C-2015/05/270 Advent International
(12 June 2015), C-2015/06/286 TVS Logistics (29 July 2015), C-2015/07/288 PVR (supra n. 4),
C-2015/08/304 KKR Credit Advisers (8 December 2015), C-2015/12/356 Mandala Rose (28 March 2016),
C-2016/01/368 Broad Street Investments (30 March 2016), C-2016/01/371 Black River Food 2
(13 May 2016), C-2016/02/373 Clariant Chemicals (11 May 2016), C-2016/03/387 LT Foods (11 May 2016),
C-2016/06/407 HDFC (1 August 2016), C-2016/10/442 Aspen Global (13 January 2017), C-2016/10/444 HP
(27 April 2017) and C-2016/11/453 CDPQ Private Equity (29 December 2016).
11 See, for example, Holcim/Lafarge, Abbott Laboratories, Dow/Dupont, Agrium/PotashCorp, Bayer/
Monsanto and Linde/Praxair (all supra, n. 3).
12 Supra, n. 3.
13 Supra n. 3.
14 See, for a recent example, Schneider Electric (supra, n. 5).
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Procedures
A broad distinction may be drawn between modifications in the Phase I review, where the par-
ties alone may offer modifications to the CCI, and modifications in the Phase II review, where the
CCI will take the lead in proposing modifications. However, there is a ‘grey zone’ after Phase I has
ended and before an investigation starts under Phase II, where parties can offer modifications.
With respect to the notifiability of combinations, in June 2017 the Indian government
removed the requirement to notify combinations within 30 calendar days of the relevant trig-
ger event.15 This has not only made it easier for parties to think through possible modifications
in advance, but also may help parties in coordinating their approach where filings are required
in several jurisdictions.
Phase I review
In Phase I the parties may voluntarily offer modifications to avoid the transaction moving to
a Phase II review.16 The CCI will evaluate and, where appropriate, require the parties to accept
the modification. There are usually discussions between the parties and the CCI before the CCI
accepts the proposals. Additional time of up to 15 days needed by the CCI to evaluate the offered
modification is not included in the 30-working day time limit for Phase I and the overall 210-day
period for the CCI to approve or prohibit a combination.
The ‘grey zone’

There is a ‘grey zone’ between the formation of a prima facie opinion that a combination will
have an AAEC and the decision to launch an investigation. Under Section 29(1) of the Act,
the CCI will issue a ‘show cause’ notice to the parties asking them to respond why an investi-
gation should not be conducted. Up to October 2018, there were no specific provisions in the
Combination Regulations addressing the making of modification proposals in the response;
however, the CCI accepted that the parties could then offer modifications that could result in
clearance without the CCI proceeding to formal publication and investigation. This happened
in Mumbai International Airport,17 Nippon Yusen Kabushiki 18 and China National Agrochemical
Corporation.19 In PVR,20 commitments were offered in response to the ‘show cause’ notice and
some of these commitments were accepted by the CCI in its final order. This possibility of offer-
ing modifications was formalised in October 2018 when the Combination Regulations were
amended to allow the parties, along with their response to the ‘show cause’ notice, to offer modi-
fications. The additional time of up to 15 days needed by the CCI to evaluate the offered modifica-
tion is excluded from the statutory time periods for the CCI to approve or prohibit a combination.
15 Ministry of Corporate Affairs, notification dated 29 June 2017.

16 See Regulation 19(2) of the Combination Regulations.
17 Supra n. 7.
18 Supra, n. 8.
19 Supra n. 3.
20 Supra n. 6.
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Phase II review
If, following the parties’ response to the ‘show cause’ notice, the CCI decides to conduct an
investigation, the CCI may itself propose modifications to the parties if it considers that these
may eliminate the AAEC.21 Although the parties have an opportunity to accept such remedies
or propose amendments to the CCI proposal, the CCI has the ‘whip hand’ and has, on occasion,
adopted a ‘take it or leave it’ approach.
In all the cases to date, the CCI tailored the remedies to the specific circumstances, often
after considerable negotiation on remedies during the Phase II investigation.
A number of possible outcomes are provided for in the Act.
First, the parties may accept the modification proposed.22 If they do so, they must carry it out
within the period specified by the CCI; if they fail to do so, the combination will be deemed to
have an AAEC, and the CCI will deal with it in accordance with the Act.23 This has happened in
only two cases, Dow/DuPont24 and Linde/Praxair.25
Second, where the proposed modification is not accepted within 30 working days and the
parties do not propose any amendment within that period, the combination will be deemed to
have an AAEC and the CCI will deal with it in accordance with the Act.26 This has not happened
to date.
Third, if the parties do not accept the CCI’s proposal, they may, within 30 working days,
submit an amendment;27 if the CCI agrees with the amendment submitted, it shall, by order,
approve the combination.28 This occurred in Sun/Ranbaxy,29 Holcim/Lafarge,30 PVR,31 Bayer/
Monsanto32 and Schneider Electric.33
Fourth, if the CCI does not accept the amendment, the parties are allowed a further period
of 30 working days to accept the modification originally proposed by the CCI.34 If they fail to do
so, the combination will be deemed to have an AAEC and the CCI will deal with it in accordance
with the Act.35 This has not occurred to date.
In Agrium/Potash36 the parties appealed to the National Company Law Appellate Tribunal
(NCLAT) against a refusal by the CCI to extend the 30-working day period for submitting their
acceptance of the proposal for modification. The NCLAT granted a six-week extension. After
discussions between the parties and the CCI, the parties submitted a new proposal that was
21 Section 31(3) of the Act and Regulation 25(1) of the Combination Regulations.
22 Section 31(4) of the Act.
24 Supra, n. 3.
25 Supra, n. 3.
29 Supra, n. 3.
30 Supra, n.3.
31 Supra, n.6.
32 Supra, n.3.
33 Supra, n. 5.
36 Supra, n. 3.
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accepted by the CCI, which noted that this did not have a material effect on the CCI’s origi-
nal proposed amendment. The NCLAT held that the proposed modified terms be treated as
approved by it and disposed of the appeal.
Market-testing remedies
Unlike in the EU, in India there is no formal process of market-testing the remedies. However,
the CCI may call for information from any enterprise while inquiring whether a combination
has caused or is likely to cause an AAEC.37 It has frequently availed of this possibility in Phase
I reviews. In Phase II, the parties are required to publish details of the combination and the
CCI may invite any affected person to file written objections.38 Although written objections have
frequently been received in Phase II reviews, it does not appear from the published decisions
that the CCI has tried to market-test any proposed remedies. However, in PVR,39 the CCI did seek
information from real estate developers on the timing of likely entry into the multiplex cinema
market and took this into account in assessing the scope of the remedy.
Addressing competitive harm: the CCI orders

Competitive harm is addressed in India in terms of AAEC. The term AAEC is not defined in the
Act and there are no general guidelines as yet. The factors to be taken into account by the CCI
in determining whether a combination has an AAEC are set out in Section 20(4), and a couple of
these factors describe competitive harm.
The prospective competitive harm identified by the CCI is, of course, critical in the choice
of remedy. In some but not all cases, the CCI has set out in detail the competitive harm it has
identified and the factors taken into account in arriving at this conclusion, and shown how the
remedies address the harm.
Divestiture cases
In a number of cases, the CCI has accepted or proposed structural remedies where a proposed
combination would result in high combined market shares and unacceptable increases in lev-
els of concentration. In all these cases, the CCI has tailored the remedies to the specific circum-
stances in each of these cases. The CCI has not followed a ‘one size fits all’ approach. ‘Divestiture’
may be of products, businesses or shareholdings. Structural remedies akin to divestiture
include commitments to exit a business or not to re-enter a market.
A number of cases have involved commitments offered by the parties in Phase I. In ZF
Friedrichshafen,40 the parties had combined market shares of 60–75 per cent, 45–55 per cent
and 20–30 per cent in various steering systems markets. The acquirer voluntarily committed to
divest its shareholding in a joint venture (JV) it had with another parts supplier, which would
leave it with an insignificant market share. The divestment was in fact completed before the
date of the CCI clearance order.
37 Regulation 10(3) of the Combination Regulations.

38 Section 29(2) and (3) of the Competition Act.
39 Supra, n. 6.
40 Supra, n. 3.
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India
In Abbott Laboratories,41 the CCI found that the combined market shares of the parties in the
relevant medical devices market was 90–100 per cent, with the other competitor having 0–5 per
cent. The CCI considered that this enhanced the merger entity’s market power and noted that
the market was already highly concentrated. The proposal to divest the business of the target
in the relevant market on a worldwide basis would remove the overlap between the parties in
India and address its concerns.
FMC 42 involved a proposed combination following on from the commitment in
Dow/DuPont to divest certain crop protection businesses (see below). The CCI identified five
overlapping markets where – taking into account high combined market shares, substantial
Herfindahl-Hirschman index increments and distantly placed competitors – market power
might be enhanced. The CCI accepted that its concerns could be addressed by the divestiture of
certain agrochemicals and associated undertakings not to re-enter the market or sell products
in India.
In China National Agrochemical Corporation,43 the CCI identified a number of overlapping
fungicide and pesticide markets where it had AAEC concerns, given the combined market
shares, the position of the competitors and high entry barriers. The CCI accepted the parties’
proposal to divest the relevant products sold by the target in India. Depending on the product,
the target would cease to be a competitor, or its market share would become negligible (0–5 per
cent), or the combined market share would reduce to acceptable levels (from 30–40 per cent to
20–25 per cent).
Other cases have involved divestitures after the Phase II investigation process. In
Sun/Ranbaxy,44 the CCI found that the merger of two pharmaceutical companies was likely to
have an AAEC in respect of seven overlapping products. For each product, the merger would
result in the elimination of a significant competitor and a corresponding reduction in signifi-
cant competitors (from three to two, or from four to three). The CCI found that the merger would
result in a near monopoly in two markets and in strengthening the combined entity’s market
position in another. In considering a fitting remedy, the CCI stated that the aim of a modification
was to maintain the existing level of competition in the market in India through: (1) creating a
viable, independent and long-term competitor; and (2) ensuring that the approved purchaser
had the necessary components, including transitional support arrangements, to compete effec-
tively with the merged entity. Each party was therefore required to divest specified products.
In Holcim/Lafarge,45 the CCI considered that, taking into account unilateral and coor-
dinated effects, the merger was likely to have an AAEC in the market for grey cement in the
eastern region of India. In assessing unilateral effects, the CCI took account of the significant
increase in the level of concentration, the absence of buyer power, the lack of significant con-
straints by competitors and significant entry barriers. In terms of coordinated effects, the CCI
factored in the prevailing market structure, the oligopolistic nature of the industry, other fac-
tors (homogeneous product, small sale transactions and entry barriers) and the increase in
CR4. It also noted that the industry was prone to collusion. It further considered and rejected
41 Supra, n. 3.
42 Supra, n. 3.
43 Supra, n. 3.
44 Supra, n. 3.
45 Supra, n. 3.
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efficiency arguments. The CCI considered that both unilateral and coordinated effects could be
eliminated by divestiture. This involved ascertaining in some detail the extent of divestiture
and determining the specific assets to be divested.
In Dow/DuPont,46 the CCI had AAEC concerns in relation to three products and sets
of products.
First, in relation to a fungicide for grapes, the CCI found that the parties had market shares
of 30–35 per cent and 5–10 per cent, that there was an increase in concentration in a moder-
ately concentrated market, that competitors were distantly placed, that there were entry barri-
ers (research, field trials and multiple approvals) and that small farmers had no countervailing
power. The CCI found that a particular formulation that was being discontinued accounted for
most of one party’s sales. It proposed that the parties that undertook the commercialisation of
the product should cease and not recommence, and withdraw registration, cancel trademarks,
and not sell or supply in India.
Second, in relation to research and development in crop protection products, the CCI con-
sidered that the proposed merger might adversely affect the Indian crop protection market
since considerable R&D activity took place outside India and this might lessen the rate at which
new products came to India. The CCI found that this concern would be addressed by a global
divestiture offered to the European Commission. This is a rare case where the CCI has explicitly
found that a remedy accepted elsewhere effectively addresses a concern of an AAEC in India.
Finally, in relation to a particular polyethylene product, the CCI had AAEC concerns given
the parties’ quite high market shares of 10–15 per cent and 25–30 per cent, the increase in con-
centration in a moderately concentrated market and the distant placing of other competitors.
As such, the CCI proposed the transfer of Dow’s business in the product in India to an independ-
ent and unconnected third party.
Agrium/PotashCorp47 involved the proposed amalgamation of two major fertiliser compa-
nies. Both of them supplied in India through a joint venture, Canpotex, in which they and a third
party, Mosaic, had joint control. The CCI found that the reduction in shareholders from three
to two would mean that each would be constrained by one rather than two shareholders. This
would lead to a greater alignment of interests and incentives. The combination would thus lead
to the strengthening of Canpotex and there would be an impact on competition dynamics.
PotashCorp also had minority shareholdings in three companies; in two of these, APC and
SQM, it had joint control, and the CCI could not rule out the possibility that it had the ability to
materially influence the policies of the third, ICL. The three companies would thus come under
the joint control of or be materially influenced by Agrium and PotashCorp.
The CCI considered that the proposed combination would be likely to have an AAEC in the
market for potash in India. Canpotex and the three companies had 45–50 per cent of the Indian
potash market, with two other significant players having shares of 20–25 per cent. Any fur-
ther increase in concentration in an already highly concentrated market could lead to adverse
competitive effects. The combination would strengthen structural links between the parties
with regard to the management and control of Canpotex. The CCI also considered that the pro-
posed combination denied the market the opportunity to create situations where it could have
46 Supra, n. 3.
47 Supra, n. 3.
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India
benefited from the probable disintegration of the JV, thereby reinforcing the coordinated effects.
The CCI also rejected arguments that Indian Potash Limited had significant buyer power and
that Canpotex was a price taker.
The CCI considered that, if the parties divested PotashCorp’s shareholding in the three com-
panies, it would create three independent competitors in the Indian market, which would be
likely to have the ability and incentive to compete more aggressively for gaining market share
in India. After some exchanges between the CCI and the parties, and a detour to the NCLAT (see
above), the parties accepted divestiture of Potash’s shareholdings in the three companies. The
case is remarkable as it involved the divestment of assets located entirely outside India.
In Bayer/Monsanto,48 the CCI had AAEC concerns in relation to: (1) non-selective herbi-
cides; (2) the upstream market for licensing of Bt traits for cotton and parental lines or hybrids
(including traits) for corn; (3) the downstream market for the commercialisation of Bt cotton
seeds, hybrid rice seeds and hybrid millet seeds; and (4) various vegetable hybrid seeds. The
CCI considered that these concerns would be addressed by a set of divestitures, requiring Bayer
to divest its non-selective herbicides business, its global broad crop and crop seeds business
(with certain carveouts) and its entire global vegetable seeds business, and Monsanto to divest
its indirect 26 per cent shareholding and rights in an Indian company, which would eliminate
the parties’ overlap in the commercialisation of Bt cotton seeds, hybrid rice seeds and hybrid
millet seeds.
In Linde/Praxair,49 the CCI found that the proposed combination of the two international
gas companies would be likely to lead to an AAEC in a number of gas markets in India. Further to
its Phase II review, it considered that these concerns would be eliminated by the divestment of
certain plants and cylinder filling stations of the parties as well as of Linde India’s shareholding
in a joint venture. AAEC concerns in relation to Helium were addressed by divestitures accepted
by the European Commission.
PVR
The PVR case50 was concerned with PVR’s proposed acquisition of the film exhibition business
of DLF Utilities Limited. The CCI identified AAEC concerns in relation to South Delhi, Noida and
Gurgaon, and in relation to cooperation and non-compete agreements51 between the parties.
For both Noida and Gurgaon, two cities adjacent to Delhi, the CCI found that there was a
highly concentrated market with a significant increase in the level of concentration; there was
no adequate competitive constraint by competitors; efficiencies were not combination-specific;
and there was very limited incentive by the acquirer to innovate. There was thus a high likeli-
hood of the parties being able to significantly and sustainably increase prices or profit margins.
PVR offered commitments for each area to terminate an agreement with the seller for the devel-
opment of a multiplex cinema. Concerns that imminent entries into the market would start to
provide effective competition in only two or three years’ time were addressed by commitments
not to expand for three years and not to acquire any direct or indirect ownership, influence or
interest over the other party for five years.
48 Supra, n. 3.
49 Supra, n. 3.
50 Supra, n. 6.
51 For the position in relation to non-compete, see the subsection on non-compete provisions below.
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India
In South Delhi, the CCI found that:

• there was a highly concentrated market with a significant increase in the level
of concentration;
• the combination would result in the removal of a vigorous head-to-head competitor;
• there was no adequate competitive constraint by competitors;
• there was limited scope for new entry;
• efficiencies were not combination-specific;
• there was low countervailing buyer power; and
• there was very limited incentive by the acquirer to innovate.
There was thus a high likelihood of the parties being able to significantly and sustainably
increase prices or profit margins. PVR offered a package of behavioural commitments includ-
ing price caps to address these concerns, but these were rejected by a majority of the CCI, which
considered that such remedies would not adequately replicate the outcomes of a competitive
market and would be difficult to formulate, implement and monitor. The CCI then proposed
that the parties should divest specified target assets in South Delhi. However, in an amendment,
PVR proposed exclusion of a narrower range of assets from the scope of the agreement, which
the CCI accepted would result in PVR having a lower market share post-combination and in
a reduction in market concentration. PVR also agreed to a freeze on expansion for five years
and not to acquire any direct or indirect influence, ownership or interest over the assets for five
years. For its part, the seller agreed that the assets would continue to provide effective competi-
tion for five years.
Further, the CCI considered that a proposed cooperation agreement between the parties in
relation to the management and operation of multiplex spaces in malls developed by the seller
was not integral or necessary to the proposed combination. This might lead to exclusive dealing
and create barriers to entry for competitors of PVR. Consequently, PVR undertook not to sign or
execute the cooperation agreement.
Operation of companies as separate businesses

In China National Agrochemical Corporation,52 the CCI had concerns relating to the bundling
of products, vertical integration, interoperability, restrictions in technology agreements and
increasing the control of the parties in the supply chain. The CCI considered that these could
enhance the market power of the combined entity to impede the local system and the innova-
tion and ability of farmers and public sector research institutions to offer alternative integrated
solutions. These concerns were addressed by an undertaking under which the parties’ Indian
companies would operate as separate, independent and competitive businesses for seven years.
Behavioural remedies in Bayer/Monsanto

In Bayer/Monsanto,53 the CCI accepted a broad package of behavioural remedies to address a
variety of concerns about horizontal overlaps, vertical foreclosure, innovation and portfo-
lio effects.
52 Supra, n. 3.
53 Supra, n. 3.
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India
In three markets, the CCI had horizontal concerns. In relation to the market for the licens-
ing of herbicide-tolerant traits technology, the CCI saw Bayer as a significant global competitor
to Monsanto; as Monsanto would no longer be threatened by Bayer’s innovation activities, it
would have less incentive to innovate in order to protect its business. In relation to the market
for the licensing of Bt trait for cotton seeds in India, the CCI noted the strong market position of
Monsanto. Although Bayer was not actually present in the Indian market, the CCI considered
that it was one of the competitors with the ability to effectively constrain Monsanto and also
noted that entry barriers were significant. In relation to the market for the licensing of parental
lines or hybrids for corn seeds, the CCI considered that the combination would result in the con-
solidation of two major players in terms of the strength of seed traits and trait stacks. To address
these concerns, Bayer undertook, for seven years after closing, to follow a policy of broad-based,
non-exclusive licensing of traits currently commercialised in India, or to be introduced there in
the future, on a fair, reasonable and non-discriminatory (FRAND) basis with willing and eligi-
ble licensees.
The CCI also had concerns about portfolio effects since the parties were present in closely
related markets. Concerns about bundling resulted in an undertaking from Bayer that the com-
bined entity would not offer its clients, farmers, distribution channels and commercial partners
bundled products that might potentially have the effect of excluding competitors. Bayer also
undertook, for a seven-year period, to follow a policy of non-exclusive licensing on a FRAND
basis of non-selective herbicides or their active ingredients in the case of launch of a trait in
India restricting producers to use specific non-selective herbicides supplied only by the parties.
Concerns that competitors might find it more difficult to get access to distribution channels
were addressed by an undertaking that the combined entity would not directly or indirectly
impose commercial dealings capable of creating exclusivity in the sales channel.
The CCI was also concerned about the possibility of the parties cornering the emerging digi-
tal farming space and effectively excluding its competitors. To address this concern, the com-
bined entity would be required for a seven-year period to provide access through licences on
FRAND terms to: (1) existing Indian agro-climatic data; (2) the combined entity’s digital farming
platforms in India for supplying or selling agricultural inputs to agricultural producers; and (3)
to subscriptions to the combined entity’s digital farming products and platforms commercial-
ised in India. In addition, the combined entity would grant access to Indian agro-climatic data
free of charge to government of India institutions in order to create a public good in India.
Finally, the CCI had concerns that the consolidation of the parties’ R&D activities in seeds
and traits would reduce the rate of innovation at which new products were launched globally
and in India and adversely affect the Indian seed market. It appears that these concerns were
addressed by the general commitments on licensing traits on a FRAND basis, which would
enable suppliers in India to innovate and launch new products for the benefit of farmers and
produce effective competitive constraints on the combined entity.
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Behavioural remedies in Schneider Electric

In Schneider Electric,54 the CCI cleared the proposed acquisition of the electrical and automa-
tion business of Larsen & Toubro on the basis of a package of behavioural remedies proposed
by the acquirers. The CCI found that the proposed combination would be likely to result in an
AAEC since:
• the transaction involved the consolidation of two prominent competitors, who were the
first and second leading players in the market, and enjoyed inherent advantages over the
other competitors, with the widest range of offerings in the market;
• the parties had high combined market shares in six markets where they overlapped;
• as the target was the most entrenched brand in India with maximum installations, there
would be replacement costs where its offering was discontinued;
• the reach and portfolio of the combined entity would lock a larger part of the distribu-
tion network and other downstream players, with such vertical integration making
entry difficult;
• new and existing competitors would not provide a competitive constraint; and
• with the massive size of the combined entity, the cost to rivals of competing and increasing
their presence in the market would be much higher than before.
The CCI initially proposed to address this by means of divestments of the target’s business in
six products. However, the acquirers argued that such divestments would be unviable and dis-
proportionate. Citing practice in the European Union,55 the acquirers successfully argued for a
package of solely behavioural remedies consisting of:
• white-labelling arrangements with third parties of five products of the target for a
five-year period;
• the provision of a non-exclusive technology licence for a further five-year period to one of
the third parties that had availed of the white-labelling;
• the amendment by Schneider Electric of its distributorship agreement and commercial
policy to remove barriers encouraging de facto exclusivity;
• the adoption by Schneider Electric of a pricing mechanism under which the average selling
price of the six high market share products would not exceed the target’s average net selling
price for the preceding year; and
• commitments in relation to R&D, exports and non-rationalisation of the target’s products.
The CCI stated that the modifications proposed would give competitors the opportunity to
strengthen their product portfolio and increase the viability of their own brand in a sustainable
way without incurring significant capital investment costs. This would enable them to become
as credible competitors as the target.
54 Supra, n. 5.
55 M.8678 ABB/General Electric Industrial Solutions (1 June 2018) and M.3593 Apollo Group/Bakelite AG
(11 April 2005).
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India
Access to infrastructure
In GSPC Distribution Networks,56 the CCI found there was no AAEC in markets for the transmis-
sion and distribution of natural gas in the state of Gujarat, largely because third-party access
was regulated. The acquirer nonetheless told undertakings that it would review contracts to
ensure compliance with the Act and sectoral legislation, and to submit a compliance report to
the CCI.
In Mumbai International Airport,57 a number of oil public sector undertakings (PSUs) pro-
posed to set up an aviation fuel farm facility in the airport. This raised concerns relating to
access by non-PSU fuel suppliers and conflicts of interest on the part of the PSUs. The parties
agreed to amend the shareholders agreement to enable non-PSUs to share in the ownership of
the fuel farm in future, to set up a joint coordination committee to ensure that fuel suppliers
were treated fairly and equitably, and to increase capacity up front. The CCI also considered
that a number of safeguards in relation to the operation of the fuel farm – publication of key
information on the website, a clause in the standard supply agreement on compliance with
competition law, giving reasons for denying suppliers the right to supply, adequate monitor-
ing mechanisms, and ensuring the facility operated ‘in complete consonance with principles
of competition law and fairness’ – would enhance transparency and promote arm’s-length dis-
tance in operating the fuel farm.
Spillover effects
In Nippon Yusen Kabushiki,58 which concerned the creation of a joint venture (JV) to carry on
container line shipping and terminal services, the CCI expressed concerns about the possible
spillover effects in the parties’ retained businesses. These were addressed by a voluntary behav-
ioural commitment to introduce a ‘rule of information control’ prohibiting exchanges of infor-
mation on the non-integrated businesses and for disciplinary action in cases of breach.
In Northern TK Venture,59 where the proposed combination involved competing healthcare
providers, a subsidiary of the acquirer had a JV with a third competitor. To alleviate concerns
that the JV could be a platform for coordinated behaviour between the combined entity and
the other competitor or JV itself, the acquirer made voluntary commitments ensuring that
the combined entity and the JV would operate as separate, independent and competitive busi-
nesses. As well as a ‘rule of information control’ preventing information exchange, with sanc-
tions for breach, there would be no common directors on the boards of the combined entity
and the JV, and the directors would provide undertakings on the disclosure of commercially
sensitive information.
56 Supra, n. 7.
57 Supra, n. 7.
58 Supra, n. 8.
59 Supra, n. 8.
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Impact on consumers
In Dish TV/Videocon,60 which involved direct-to-home broadcasting services, concerns that cus-
tomers would have to bear the costs of any technical alignment carried out by the new entity
were allayed by a commitment that the combined entity would bear the costs of such alignment.
A similar approach was taken in Jio,61 which had acquired stakes in two companies provid-
ing cable TV and other services. The parties undertook there would be no technical realignment
which would result in changes in equipment in customer premises. In the event of such techni-
cal alignment, the costs would be borne by the parties. The parties also undertook that, after
the combination, the customers would be free to choose any type(s) of services or their bundle
(broadband, cable TV and telephone) offered by the companies.
Non-compete provisions
In 16 cases the CCI accepted commitments in relation to non-compete provisions. In Orchid
Chemicals,62 the CCI stated that a non-compete obligation had to be reasonable as regards dura-
tion and the business activities, geographical areas and persons subject to restraint. In a num-
ber of earlier cases,63 the CCI accepted commitments reducing the term of the non-compete obli-
gation from eight, six or five years, to four years. In later cases, it accepted reductions from five
(and in one case seven) years to three years.64 In the chemicals and pharmaceutical sectors, the
CCI accepted commitments to limit the non-compete to products that were actually manufac-
tured or under development.65 In Torrent Pharmaceuticals,66 the parties committed to carving
out products that were not part of the transferred business from the scope of the non-compete
and to delete a ‘catch-all’ clause. In terms of geographic scope, the CCI accepted commitments
limiting the non-compete to territories in which the target operated.67
In a number of cases involving private equity investment, the promoters of the target
accepted non-compete obligations until either the acquirer or the promoter ceased to hold
10 per cent of the shares. The CCI accepted commitments to increase the level of shareholding
as far as the acquirer was concerned to 10 per cent.68 In one case, the promoters were required
not to take up any active executive role with another person even if not engaged in competing
business with the target: the parties offered to limit this to cases where the other person com-
peted with the target.69 In Black River Food 2,70 the parties agreed to delete a clause requiring the
promoters to take all such actions within their control to ensure that the target company and its
subsidiaries were the only entities that engaged in the production of a broad range of food and
FMCG products.
60 Supra, n. 9.
61 Supra, n. 9.
62 Supra, n. 10.
63 Orchid Chemicals, Mylan, Torrent Pharmaceuticals (all supra, n. 10).
64 Advent International, TVS Logistics, PVR, Clariant Chemicals, Aspen Global, HP (all supra, n. 10).
65 Orchid Chemicals, Mylan (both supra, n. 10).
66 Supra, n. 10.
67 Broad Street Investments (supra, n. 10).
68 KKR Credit Advisors, Mandala Rose, Broad Street Investments and CDPG Private Equity (all supra, n. 10).
69 Broad Street Investments (supra, n. 10).
70 Supra, n. 10.
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In July 2017, the CCI issued a guidance note on non-compete restrictions.71 This makes it
clear that such restrictions will be ancillary to a combination and covered by a clearance order
only where they are directly related to and necessary to the implementation of the combination.
Where the restriction is not ancillary, this may be stated in the clearance order and the restric-
tion may be dealt with under other provisions of the Act. There is therefore no longer any need
for parties to amend non-compete obligations in order to get clearance.
Implementing the remedy: the divestiture cases

In many of the divestiture cases, the CCI has set out in some detail the elements of the required
divestiture.72 Although space does not permit a detailed examination of these elements, they
may be briefly set out as follows:
• Identifying the divestment business: the necessary components of the business, including,
in some cases, key personnel, are set out in the order.
• First divestiture period: the divestiture is, in principle, to take place with requisite CCI
approvals in the first divestiture period. Typically, this period is six months from the date
of clearance decision, though it was 18 months in Agrium/PotashCorp.73 The period is often
treated as confidential in the order.
• Preservation of economic viability, marketability and competitiveness: measures are to be
taken to ensure that the business to be divested is run as a viable business, that assets are
not degraded, etc.
• Hold separate obligations: where the business to be divested is part of a broader business,
the former is to be kept separate with the appointment of a hold separate manager. In the
case of divestment of shares, the divesting shareholders are not to exercise voting rights or
be involved in the business from the date of the CCI’s decision.
• Ring-fencing: confidential information is not to be shared between the parties and the
divested business.
• Non-solicitation: there is a limitation on employment by the parties of key personnel trans-
ferred to divested business.
• Due diligence: the parties are to provide information to potential purchasers to allow them
to undertake reasonable due diligence.
• Reporting: the parties are to keep the monitoring agency informed of the process and poten-
tial purchasers.
• No acquisition of influence: the parties are not to acquire direct or indirect influence over
divestment business for a specified period after closing.
• Purchaser requirements: various purchaser requirements are set out to ensure that the pur-
chaser will be an independent and viable player in the market.
71 This is accessible from the Combinations section of the CCI website (supra, n. 2).
72 Sun/Ranbaxy, Holcim/Lafarge Dow/DuPont, China National Agrochemical Corporation, Agrium/
PotashCorp, FMC and Bayer/Monsanto (all supra, n. 3).
73 Supra, n. 3.
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India
• Approval of the sale and purchase agreement and of the purchaser: the CCI is to give
approval to the purchaser and of the terms of the sale and purchase agreement. In all cases
other than Sun/Pharma,74 the CCI has permitted the closing of the main transaction pend-
ing closing of the divestment.
• Monitoring agency: the CCI generally appoints an independent agency as a monitoring
agency to supervise the carrying out of the modification.75
• Second divestiture period: if the parties fail to divest in the first divestiture period, the CCI
may direct the parties to divest alternative divestment products in a second divestiture
period. This will be overseen by a divestment agency who will have the sole authority to sell
at no minimum price.
• Duties and obligations of parties: the parties are generally required to cooperate with the
monitoring agency and, if applicable, the divestment agency. The CCI may also request
information from the parties reasonably necessary for the effective implementation of
the order.
Securing compliance
The CCI has not, to date, identified any cases of non-compliance with modifications.
The Act and the Combination Regulations contain a number of provisions that address
compliance with modifications in Phase I and Phase II.
Where the CCI approves a combination with modification, the CCI’s approval order shall
specify the terms, conditions and time frame for all the actions required for giving effect to the
combination.76 Where the parties fail to carry out the modification accepted by them within the
stipulated time limit, the CCI shall issue appropriate directions.77
The Act provides for penalties for non-compliance with orders or directions of the CCI.78 A
person who fails without reasonable cause to comply with such orders or directions, including
those issued under Section 31, may be fined up to 100,000 rupees per day of non-compliance, up
to a maximum of 100 million rupees. If there is no compliance with the order or directions, or
a failure to pay a fine, the person concerned is then punishable with up to three years’ impris-
onment, or up to a 250 million-rupee fine, or both, by the Chief Metropolitan Magistrate, New
Delhi. Compensation may also be sought by persons for loss of damage shown to have been
suffered as a result of an enterprise violating directions issued by the CCI or contravening,
without any reasonable ground, any decision or order of the CCI, or any condition or restriction
subject to which any approval, sanction, direction or exemption in relation to any matter has
been accorded, given, made or granted under the Act or delaying in carrying out such orders or
directions of the CCI.79
74 Supra, n. 3.
75 See Regulation 27 of the Combination Regulations for provisions on the appointment of independent
agencies to oversee modification. This originally covered only modifications proposed by the CCI
and accepted by the parties. Reflecting de facto practice, it was amended in October 2018 to cover
all modifications.
78 Section 43 of the Act.
79 Section 42A of the Act.
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India
The CCI has also addressed compliance in specific orders. These, together with legal provi-
sions specific to Phase II orders, are outlined below.
Phase I
In a number of cases involving non-compete clauses, the parties were directed to give effect
to the modification. In Dish TV/Videocon80 and later in Jio81 the parties were directed to file a
compliance report annually for five years. In Mumbai International Airport,82 the parties were
directed to give effect to the commitments. The CCI stated that the order would stand revoked
in case of failure to comply. The same statement was made in Nippon Yusen Kabushiki and
Northern TK Venture.83
In Abbot Laboratories,84 approval was expressly given subject to the parties carrying out the
modification. The parties were directed to inform the CCI as soon as the modification was carried
out and the combination consummated. If there was any change in the modification, or it was
not carried out, the parties were to inform the CCI so that it might reconsider its approval order.
The clearest statement was made in China National Agrochemical Corporation,85 where the
CCI approved the proposed combination subject to compliance with the divestiture commit-
ments and undertaking given in the remedy proposal, and gave a detailed direction. In case of
failure to comply, the proposed combination would be deemed to have caused an AAEC in India.
In FMC,86 the order stated that the acquirer was to notify the CCI at least 30 days prior to any
change in the corporate structure of the parties that might adversely affect their compliance.
Phase II
Section 31(5) of the Act addresses the case where the parties accept the modification proposed
by the CCI without themselves submitting amendments; where the parties fail to carry out the
modification within the period specified by the CCI, the combination will be deemed to have
an AAEC and the CCI will deal with this in accordance with the Act. In Dow/DuPont,87 the CCI
expressly approved the proposed combination subject to the parties carrying out the modifi
cation accepted unconditionally by them.
The Combination Regulations provide that, where the parties have accepted the modifi
cation proposed by the CCI under Section 31(3) of the Act, where the CCI agrees with the par-
ties’ amendment under Section 31(7), or the parties accept the CCI’s modification under Section
31(8), the parties are to carry out the modification as per the terms and conditions and within
the period specified by the CCI and submit an affidavit to that effect.88
In both Sun/Ranbaxy and Holcim/Lafarge,89 the CCI approved the combination under
Section 31(7) subject to the parties carrying out the modification to the combination. In PVR,90
approval under Section 31(7) was made subject to the parties complying with the commitments
86 Supra, n. 3.
87 Supra, n. 3.
89 Supra, n. 3.
90 Supra, n. 6.
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India
given in relation to Gurgaon and Noida, and carrying out the modifications accepted in relation
to South Delhi. In Agrium/Potash,91 the CCI approved the proposed combination under Section
31(7) subject to the parties carrying out the modification as approved by the NCLAT.
In Bayer/Monsanto92 and later in Linde/Praxair93 the CCI stated that, if the parties failed to
comply with the modifications, the Proposed Combination would be deemed to have caused an
AAEC in India and the concerned parties would render themselves liable to being proceeded
against under the relevant provisions of the Competition Act.
In Schneider Electric,94 the CCI stated that the remedial modifications were ‘to be inter-
preted purposively to give effect to the objectives of offering them’. Schneider Electric and its
affiliates were not to make any commercial offer or engage in a dealing with respect to the LV
switchgear products that had the effect of diluting the effect or objectives of the modifications.
Apart from attracting proceedings for breach of the modifications, the person concerned could
also be proceeded against under relevant provisions of the Act, including Section 4 (abuse of
dominant position).
The CCI also required the filing by the acquirers of an annual report on compliance with the
modifications, along with a narrative of how the remedies were working in the Indian market
and a description of the state of play of competition in the market.
Finally, mention should be made of the vital role of independent agencies in oversee-
ing modifications. As seen above, provision is routinely made in the divestiture cases for the
appointment of monitoring agencies and, where this becomes necessary, of divestment agen-
cies. Monitoring agencies have also been appointed to oversee behavioural commitments. For
example, in Schneider Electric,95 the CCI stated that the behavioural remedies offered by the
acquirers ‘contemplate monitoring of various aspects therein’ and the clearance order provided
for the appointment of an independent agency as monitoring agency to supervise the modifi
cations and ensure compliance by the acquirers.96
Conclusion
Some general points may be made by way of a conclusion.
The CCI has shown that, rather than block a transaction with an AAEC, it will be prepared to
consider remedies to secure clearance. This preference may continue, with the recent Schneider
Electric order97 being ‘the exception that proves the rule’.
The CCI is prepared to avail of a broad range of structural and non-structural remedies,
though, where there are significant horizontal overlaps, it has shown a clear preference for
structural over behavioural remedies.
91 Supra, n. 3.
92 Supra, n. 3.
93 Supra, n. 3.
94 Supra, n. 5.
95 Supra, n. 5.
96 Exceptionally, the appointment of the monitoring agency in that case was made public in a notice dated
11 July 2019.
97 Supra, n. 5.
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India
In addition, the CCI will tailor the remedies to the facts of each case and has rejected a ‘one
size fits all’ approach. It will engage in detailed discussions with the parties to ensure that the
remedy eliminates the competitive harm it has identified.
As an active member of the International Competition Network, the CCI takes from and con-
tributes to the best practices developed by that body. Although not specifically referred to, ele-
ments of the 2016 Merger Remedies Guide are clearly reflected in the clearance orders.
In dealing with the Indian element of global mergers, the CCI is actively engaging with
other antitrust authorities to finalise the remedies acceptable in India. The CCI has developed
good relationships with its counterparts in major jurisdictions such as the US and the EU, and
will draw inspiration from practice elsewhere. However, the CCI has shown that it will focus
on competition effects in India and will not necessarily follow the approach to remedies taken
elsewhere. It is also clear that where the Indian market is affected, the CCI will seek remedies in
relation to assets outside India.
Intelligent planning by parties can help in getting remedies that they will be (at least rela-
tively) happy with. Serious consideration needs to be given to offering proportionate modifica-
tions in Phase I, though parties may prefer to wait until the beginning of Phase II before reveal-
ing their hand. Any later, and the CCI may have a stronger hand. In any case, where a deal may
raise AAEC concerns, the parties should think about remedies far in advance and have a viable
‘plan B’ ready to discuss with the CCI.
Finally, mention should be made of the recent report of the Competition Law Review
Committee,98 which was tasked to review and recommend a robust competition regime, and
suggest changes in the substantive and procedural aspects of competition law. This contained
three recommendations in relation to remedies that may, in turn, lead to changes in the Act and
in the Combination Regulations.
First, equal opportunities should be given to the CCI and the notifying parties to propose
remedies at various stages of the review process. Second, market testing of proposed remedies
should be robust and undertaken where required. Third, annual reports of companies subject
to remedies could make disclosure on compliance with remedies.
Whatever changes may result from this exercise, it is certain that the law and practice on
merger remedies in India will continue to evolve.
98 This was published on the website of the Ministry of the Corporate Affairs (http://mca.gov.in/Ministry/
pdf/ReportCLRC_14082019.pdf).
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20
Japan
Vassili Moussis, Yoshiharu Usuki and Kiyoko Yagami1
Introduction
Merger control was introduced in Japan by the 1947 Japanese Antimonopoly Act (AMA),
together with Japan’s first competition rules. Merger control is enforced by the Japan Fair Trade
Commission (JFTC), which was established as an independent administrative office with broad
enforcement powers and is currently composed of a chair and four commissioners. The JFTC
has primary jurisdiction over the enforcement of merger control under the AMA. The JFTC’s
basic stance towards merger remedies is set out in a series of Guidelines published by the JFTC,
including ‘Policies Concerning Procedures of Review of Business Combination’ (the Policies)
and ‘Guidelines to Application of the Antimonopoly Act Concerning Review of Business
Combination’ (the Guidelines).2
Parties can propose remedies to the JFTC at any stage of the JFTC’s review, including during
either the Phase I or the Phase II review, or both. The AMA does not set out any specific proce-
dural steps in relation to remedies.
While the number of cases involving merger remedies is smaller than in the EU and the US,
the JFTC takes a broadly similar attitude to its EU and US counterparts towards assessing both
competition issues and proposed remedies. Typically the JFTC prefers that merger remedies be
put in place prior to the completion of the transaction, and monitors parties’ compliance with
such remedies by requesting periodical reports from the parties.
1 Vassili Moussis is a senior foreign counsel, and Yoshiharu Usuki and Kiyoko Yagami are partners at
Anderson Mōri & Tomotsune. The authors wish to thank Alice Boughton for her assistance with the
preparation of this chapter.
2 See www.jftc.go.jp/en/legislation_gls/imonopoly_guidelines_files/pcbr.pdf (the Policies); www.jftc.
go.jp/en/legislation_gls/imonopoly_guidelines_files/110713.2.pdf (the Guidelines). Please note that
English language translations are tentative, and that the Japanese versions of the Policies and the
Guidelines remain the authoritative guides.
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Japan
Remedies: basic framework

The JFTC will consider, on a case-by-case basis, approving the proposed transaction based,
where relevant, on voluntary undertakings proposed by the transaction parties. Broadly speak-
ing, the Guidelines are in line with the European Commission’s 2008 Notice on Remedies3
(although less detailed in their content), and share the general objective of ensuring a competi-
tive market structure through appropriate remedies to competition issues. The JFTC’s willing-
ness to consider such remedies is set out in Part IV of the Guidelines, which stipulates that
appropriate remedies will be considered based on the facts of individual cases.
As in many other jurisdictions, the JFTC prefers that remedies should, in principle, be
structural, such as the transfer of all or part of a particular business, with the aim of restor-
ing competition lost as a result of the transaction in order to prevent the resultant group from
controlling pricing or other market factors. However, the JFTC acknowledges that there may be
cases where behavioural remedies are appropriate. For example, in 2011 the JFTC considered a
proposed merger between Nippon Steel Corporation and Sumitomo Metal Industries, a transac-
tion that resulted in the formation of the world’s second-largest steel maker. Following a Phase
II review, the JFTC approved the merger (which reduced the number of competitors in some
product markets from three to two), following the submission of proposed behavioural reme-
dies by the parties. These remedies included obligations to supply a third-party market entrant
on conditions that were reasonable and equivalent to those offered to the group’s affiliates in
relation to the high-pressure gas pipeline engineering business, and to provide to third parties
trading rights for non-oriented electrical steel sheets at a price equivalent to the production
cost.4 Behavioural remedies were also accepted in the case of a vertical business combination
between ASML US Inc and Cymer Inc. A detailed explanation of the behavioural remedies used
in this vertical integration is set out below.
Procedural issues
Consultation prior to notification
As in many other jurisdictions, parties have the ability to engage with the JFTC in consultations
(including possible remedial commitments) well before formal notification is due. In practice,
the pre-notification consultation system in Japan differs from that of many other jurisdictions
in terms of the depth of feedback that the JFTC may provide at this early stage. Rather than hav-
ing to wait until competition concerns have been identified by the authority before initiating
remedy discussions, parties can (and are advised to) approach the JFTC to discuss a potential
solution well in advance of filing a formal notification.
Experience suggests the JFTC adopts quite a flexible approach towards topics to be dis-
cussed during the prior consultation stage, and the scope of discussion has not changed drasti-
cally following the abolition of the more formal ‘voluntary consultation’ in 2011. The scope of the
JFTC’s pre-notification review remains relatively wide. This is in part influenced by the fact that
3 Commission Notice on remedies acceptable under the Council Regulation (EC) No. 139/2004 and under
Commission Regulation (EC) No. 802/2004.
4 In this case, among other factors, the JFTC took into account the ease of importing products from Korea
and China, which it believed would prevent the merged group from attempting to increase prices. See
www.jftc.go.jp/en/pressreleases/yearly-2011/dec/individual-000457_files/2011_Dec_14.pdf.
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Japan
the JFTC, like the transacting entities, cannot ‘stop the clock’ of the Phase I review period once
formal notification has been received (as explained below). The JFTC therefore often prefers to
commence discussions prior to formal notification, in order to permit itself sufficient time to
analyse complex cases.
Indeed, the JFTC may engage in market testing during the pre-notification period. The case
team conducts market testing by issuing questionnaires to competitors, customers and other
interested third parties. The JFTC has been known to conduct hearings and interviews even
at this stage. This permits the JFTC to address relatively substantive issues promptly, allowing
the transacting parties time to prepare counterarguments or rebuttals to any negative feedback
received from third parties during the market testing, and to prepare further remedial measures
to propose to the JFTC. The informal pre-notification consultation process relies on a reciprocal
relationship of trust and cooperation, as the JFTC may, depending on the case, invest significant
resources in a transaction even prior to receiving formal notification of the proposed merger,
and the transacting parties will be expected to engage fully and provide significant amounts
of information at this preliminary stage. The system relies on the close working relationship
between the JFTC and Japanese counsel, who work together to ensure that viable solutions are
agreed in a timely fashion.
The JFTC will not issue binding guidance as to its substantive review of the case during
the pre-notification phase. However, in practice, provided that the companies in question have
fully cooperated with the JFTC in providing the fullest amount of information possible, and
that the JFTC is able to gather enough data on the industry and market liable to be affected,
the JFTC rarely diverges from the advice it provided at the pre-notification stage, unless some
material difference comes to light that necessitates a re-evaluation of the potential effect of the
transaction on competition.
Consultation with the JFTC at an early stage is vital for the smooth process of the review.
This is particularly important given the inflexibility of review timetables in Japan, as outlined
in the following section.
Procedure after notification

Phase I review
When a company submits a notification form to the JFTC, that company is prohibited from
effecting the contemplated transaction until the expiration of a 30-calendar day review period.
The JFTC may permit a shortening of the Phase I review period in response to the formal request
of a company; however, once the review period has begun, it cannot be extended by either the
JFTC or a notifying party. A request for further information from the JFTC as part of a Phase I
review does not stall or restart this review period.
Instead, where discussion with the JFTC suggests that the transaction will not be cleared
under the Phase I review, practice is for the parties to withdraw the notification, and refile it
at a later date once further appropriate remedies have been agreed between the parties. As
well as the ubiquitous benefits of avoiding a lengthy Phase II review, under the Japanese sys-
tem this has the additional benefit of protecting the confidentiality of the transaction and of
the remedies agreed. While the JFTC has been publishing a quarterly summary of cases that
it has cleared since November 2017, this summary does not include transactions that are not
otherwise in the public domain. However, the JFTC will publicly announce the beginning of
any Phase II review, thereby making the proposed transaction public, even if it is not yet in the
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Japan
public domain. Because of this, where confidentiality of the transaction is important, compa-
nies often prefer to withdraw their notification and conduct private discussions with the JFTC
regarding further remedies, in an attempt to ensure that the transaction is cleared under a
Phase I review so as to maintain the confidential nature of the transaction.
Remedies are proposed by the parties rather than the JFTC. Usually, the JFTC will first indi-
cate its competitive concerns to the parties, who will then offer merger remedies to address
the concerns set out by the JFTC. However, in some cases, the parties will pre-emptively offer
merger remedies themselves, without the JFTC having to raise concerns about the transaction,
thus increasing the chances of the JFTC being able to clear the transaction within the 30-day
Phase I review period. Pre-notification consultation assists parties in preparing merger rem-
edies in this way.
It is also worth noting that the JFTC’s quarterly register provides no information regarding
remedies that contributed to the transaction’s clearance, though some limited information of
Phase II cases that involved merger remedies is disclosed as part of the information contained
in the JFTC’s annual review. Therefore, notifying corporations often find a lack of public prec-
edents to indicate the remedies that have been acceptable to the JFTC in past cases. This lack
of publicly available information increases the importance of both: (1) involving experienced
Japanese counsel early in the discussions of proposed remedies where the transaction is likely
to be caught by the AMA; and (2) timely pre-notification consultation with the JFTC.
Phase II review
At the close of the 30-day Phase I review period, the JFTC will normally either: (1) judge that the
business combination in question is not problematic and give a notification to the effect that it
will not issue a cease-and-desist order; or (2) indicate that a more detailed review is necessary.
In the latter case, the JFTC will usually request that the notifying entity submit further reports
and documentation. When the JFTC requires the notifying party to submit these reports, it will
release a statement to the public to that effect. The JFTC will confirm to the notifying party
when it has received all the information it requires.
The Phase II review period will conclude at the expiry of the later of: (1) 120 calendar days
from the JFTC’s receipt of the formal notification of the proposed transaction; or (2) 90 calendar
days from the JFTC’s confirmation that it has received all required information.5 Because (2)
is conditional on the JFTC being satisfied that it has all of the necessary information, there is
always some uncertainty at the outset of a filing as to the latest date on which clearance (or
notice of a cease-and-desist order) can be received. Clients are often keen to establish the max-
imum possible time frame for the JFTC’s review, particularly where the transaction involves
multiple jurisdictions (as the parties will usually wish to coordinate their applications and the
likely clearance dates with the various authorities involved). However, as a practice, the JFTC
has discretion as to when it feels that it has received all of the information it requires. As Phase
II is limited only by the later of the dates described in options (1) and (2) above, the inability to
predict when the 90-day period will begin casts uncertainty over the overall long-stop date for
5 See Policies Concerning Procedures of Review of Business Combination, p. 11.
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Japan
a Phase II review. Such uncertainty adds to the importance of pre-notification discussions with
the JFTC, to ensure that as much information as possible is provided early to allow the JFTC to
review as swiftly as it can.
At the end of the Phase II review period, the JFTC will either:
• decide, based on the additional information or as a result of additional remedies proposed,
that the merger in question will not be problematic and notify the parties that it does not
intend to issue a cease-and-desist order (although the JFTC reserves the right to issue such
an order at a later date if remedies are not properly implemented); or
• provide ‘prior notice’ of a cease-and-desist order. Such prior notice (which was imple-
mented in April 2015 as part of a series of AMA reforms aimed at increased transparency
of the review process) is provided by the JFTC to the transaction parties in order to permit
them increased rights of defence; the receipt of the notice allows the parties to discuss
and rebut the JFTC’s arguments in favour of issuing a cease-and-desist order, see evidence
used in forming these arguments, and engage in formal meetings with a separate officer of
the JFTC.
In practice, where the JFTC has indicated during discussions that it is likely not to approve the
transaction, parties often opt to withdraw their filing application rather than await the JFTC’s
prior notice of a cease-and-desist order. For example, in the case of Lam Research Corporation
and KLA-Tenor Corporation in 2016, the JFTC informed the parties of a concern that the proposed
business integration would substantially restrain competition in the field of the production and
sale of semiconductor fabrication equipment, because of Lam’s potential ability to foreclose its
competitors by reducing their timely access to KLA-Tenor Corporation’s metrology and inspec-
tion equipment and related services.6 The transaction also received unfavourable feedback
from the Antitrust Division of the US Department of Justice and other competition authorities
with whom the JFTC cooperated closely. The parties announced that they abandoned their pro-
posed business integration plan and withdrew the submission on 6 October 2016.
Types of merger remedies

The Guidelines set out the basic forms of remedies that are typically acceptable to the JFTC.
These measures can be taken either independently or in combination, as appropriate in
the circumstances.
The JFTC considers that the most effective remedies are those that either establish a new
independent competitor or strengthen existing competitors, so that these competitors can
serve as an effective check on competition. These measures include the transfer of all or part
of the business of the post-merger group, the dissolution of an existing business combination
(such as through the disposition of some or all of the voting rights held in another company) or
the elimination of business alliances or agreements with third parties. While where the remedy
takes the form of a transfer the JFTC prefers that a buyer is found and identified to the case team
prior to the JFTC’s approval of the transaction, this is not always necessary.
6 See JFTC press release: www.jftc.go.jp/en/pressreleases/yearly-2016/October/161007.html.
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Japan
However, the Japanese system differs from the European model in that a monitoring trustee
is rarely used (for example, it was considered in the Zimmer/Biomet case of 2015).7 Instead, it is
the JFTC’s case team that monitors the implementation of merger remedies, and, where a trans-
fer has been proposed and accepted as a suitable remedy, the JFTC will assess the viability of a
proposed third-party purchaser, whether they are identified before or after the conclusion of
its review. The JFTC remains involved in the process, and retains the right to issue a cease-and-
desist order if the merger remedies are not correctly implemented or it is the JFTC’s belief that
transfer to the proposed transferee will not sufficiently promote competition, notwithstanding
that the formal review process concluded with the JFTC’s approval.
Where it proves difficult to find a suitable transferee to participate in one of the above rem-
edies (for instance, where there is declining demand in the relevant sector) other effective rem-
edies may be used, such as setting up cost-based purchasing rights for competitors through the
entry into long-term supply agreements. Other exceptional remedies include measures to pro-
mote imports and market entry, such as assisting imports by making group company facilities
available to competitors, or granting licences in respect of company group-owned patents to
competitors or new market entrants. Additional behavioural remedies such as prohibiting dis-
criminatory treatment of non-affiliated companies with respect to the use of essential facilities
for the business or ‘firewalling’ the exchange of information between various group companies
will also be considered where appropriate. Where behavioural remedies are accepted, the JFTC
will also often remain involved in the monitoring of the implementation and effectiveness of
these remedies, such as by requiring regular reports by independent third parties.8
Multi-jurisdictional remedy coordination

Information exchange and collaboration
The JFTC works actively with other major competition authorities on specific cases, includ-
ing through the exchange of information with its foreign counterparts, and is entitled to share
with foreign competition authorities information that is deemed helpful and necessary for the
performance of the foreign competition authority’s duties where such duties are equivalent to
those of the JFTC under the AMA. In addition, the JFTC has entered into bilateral cooperation
agreements with various competition authorities, including the US, the EU and Canada, as well
as the Philippines, Vietnam, Brazil, Korea, Australia, China, Kenya, Mongolia and Singapore.9 It
is reported that in respect of large-scale multi-jurisdictional transactions, the JFTC does par-
ticipate in significant exchanges of information with other authorities, including its counter-
parts in the US and the EU; for example, in the review of the Zimmer and Biomet case in 2015 and
the Lam Research and KLA-Tencor case in 2016, the Broadcom and Brocade case in 2017 and the
merger of the container shipping business of Nippon Yusen, Kawasaki Kisen Kaisha and Mitsui
OSK Lines in 2017. It is therefore important that information given to and submissions made to
the JFTC are consistent with those made to other competition authorities.
7 In this case, the JFTC approved the following remedy; if buyer cannot be found a certain period of time,
a third party as trustee will be given the authority to sell at a price without a lower limitation.
8 See, for example, the analysis of ASML US Inc (a subsidiary of ASML Holdings NV) and Cymer Inc below.
9 A list of all international agreements and memoranda concerning competition law is available at:
www.jftc.go.jp/en/int_relations/agreements.html.
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Timing considerations
As detailed above, in July 2011 the JFTC abolished the voluntary prior consultation procedure,
meaning that the formal substantive review of the transaction only begins at the formal noti-
fication stage. In addition, as explained above, even in cases where the parties submit a pro-
posed remedy to the JFTC early on, the review periods for either Phase I or Phase II reviews
cannot be extended, nor can the JFTC ‘stop the clock’ while remedies are being discussed. This
has the potential to cause difficulties in a multi-jurisdictional merger, where the timings for
the filings of multiple notifications must be carefully managed to avoid conflicting remedies or
prohibition decisions. Problems can also arise in situations where a client wishes to guarantee
clearance by a particular date in order to coordinate with its applications in other jurisdictions,
since, as detailed above, the latest possible date on which the review could finish if it progresses
to Phase II cannot be ascertained at the time of filing.
Solutions to the above problems include engaging in in-depth pre-notification discussions
with the JFTC in order to ascertain whether a Phase II review is likely to be necessary, and, if not,
delaying filing of the formal notification until 30 days before a decision is required. This method
relies on the provision of large amounts of information to the JFTC prior to filing, and is based
on mutual trust and negotiation between Japanese counsel and the JFTC in order to establish
whether a Phase II review is likely.
On the other hand, since neither the parties nor the JFTC can extend the amount of time for
either a Phase I or a Phase II review, in the event that a decision in another jurisdiction is delayed
or a review period is extended, it may be necessary to pull and refile the relevant application
with the JFTC in order to coordinate the timing of the JFTC’s and other authorities’ decisions.
Each of these solutions requires an in-depth understanding of the Japanese system, and
high levels of communication with the JFTC at a very early stage in the transaction. Early coor-
dination between Japanese and counsel working on the transaction across the globe is there-
fore of great importance.
Foreign-to-foreign mergers
Foreign-to-foreign mergers are caught by the AMA in the same way as domestic mergers if
they will have an impact on the Japanese market, and therefore must be notified in the same
way. The JFTC’s willingness to investigate foreign-to-foreign transactions was demonstrated
by its 2008 investigation into the proposed acquisition of Rio Tinto by BHP Billiton. The pro-
posed transaction (subject to the rules prior to the 2009 amendment) did not trigger a formal
filing requirement, but the JFTC was concerned that the transaction would have substantially
restrained competition in some fields of trade where iron ore and coal have been supplied by
seaborne trade. Although the review was abandoned as the transaction was aborted, the case
clearly demonstrates the JFTC’s willingness to investigate foreign-to-foreign transactions, stat-
ing at the termination of the review that it would ‘continue to proactively respond to merger
cases between foreign companies, as well as those between domestic companies, if they would
have a great influence on competition in markets in Japan’. 10 Such investigations will necessi-
tate careful coordination with expert local counsel across the other jurisdictions involved.
10 www.jftc.go.jp/en/pressreleases/yearly-2008/dec/individual_000067.html.
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Recent trends
The combined approach: the Idemitsu and Showa Shell case, and the JXHD
and TonenGeneral case
Idemitsu, Showa Shell, JXHD and TonenGeneral (TG) are Japan-based major oil refiners. In
December 2015, Idemitsu notified the JFTC of its proposed acquisition of more than a 20 per
cent share in Showa Shell. Shortly after, JXHD also notified its intention to acquire more than a
50 per cent share in TG. As the proposed acquisitions would be implemented around the same
time, the JFTC took a ‘combined approach’, meaning that each assessment was based on the
assumption that the other transaction had already been implemented. This is in contrast to
a ‘priority rule’, whereby cases are assessed separately and the increased market share result-
ing from the earlier of the two transactions is taken into account in the review of the second
one only.11
The JFTC focused on an in-depth review of the refinery and wholesale of fuel oil and liq-
uefied petroleum (LP) gases, where the parties had a relatively higher share in the respec-
tive market.
Refinery and wholesale of fuel oils

The JFTC was concerned that the proposed transactions would create a highly oligopolistic
market. For example, 50 per cent and 30 per cent of the gasoline market share would be held
by the combined JXHD/TG group and the combined Idemitsu/Showa Shell group respectively,
while 10 per cent would be held by a third-party competitor whose excess supply capacity was
limited. The JFTC found that the high level of pressure from competition between JXHD and
Idemitsu meant that neither the JXHD group nor the Idemitsu group would be able to unilater-
ally act in such a way as to raise prices of fuel oil. However, the combination of the proposed
acquisitions would create a situation where the refineries could easily coordinate their conduct
to restrain competition.
Production and wholesale of LP gases

The JFTC established that there were four major producers of LP gases in Japan, whose com-
bined market share would amount to 80 per cent, and each of the transaction parties held
shares in one or two of these wholesalers. In particular, following the proposed transactions,
each of the combined JXHD/TG group and the combined Idemitsu/Showa Shell group would
hold 25 per cent of the shares in the LP gas producer Gyxis Corporation (Gyxis), with the remain-
ing shares held by two other competitors. Having examined various factors, including the sta-
tus of joint shareholding and interlocking directorates, the JFTC found that, after the acquisi-
tions, these producers of LP gases could easily anticipate the activities of other competitors. The
JFTC thus concluded that the proposed acquisitions would create a ‘joint relationship’ among
these four producers of LP gases, thereby resulting in a situation where the combined JXHD/
TG group and the combined Idemitsu/Showa Shell group could restrain competition through
coordination among the four producers.
11 The JFTC seems to have taken the same ‘combined approach’ in the Seagate/Samsung case and the
Western Digital/Viviti Technologies case in 2012.
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Remedies
The parties proposed the following main remedies.
With respect to fuel oil, it was proposed that the parties assume the responsibility of other
oil importers to store fuel oil until such time that the volume of fuel oil imported by the com-
petitors reaches 10 per cent of the entire domestic demand. The parties further undertook
not to treat the downstream distributors, which import fuel oil on their own, differently from
other distributors.
With respect to LP gases, the Idemitsu group proposed a reduction of Showa Shell’s share-
holding (down to 20 per cent) and involvement in the management of Gyxis. The JXHD group
also proposed to transfer all the shares that TG currently holds in Gyxis to a third party and to
maintain its supply of products to Gyxis.
The JFTC approved the transactions based on these remedies. This case is notable because
the JFTC concluded that a substantial restraint of competition could exist solely on the basis
of the likelihood of coordinated conduct, whereas historically it tended to find a substantial
restraint of competition only based on unilateral conduct.
Remedies for vertical integration: ASML US Inc (a subsidiary of ASML

Holdings NV) and Cymer Inc
In 2013, the JFTC received notice that ASML (a world leader in the manufacture and provision
of lithography tools used in the front-end process of semiconductor manufacturing) intended
to acquire the full share capital of its key supplier, Cymer Inc (whose business involved the
manufacturing and sale of excimer lasers and extreme ultraviolet light sources, which com-
pose an important part of the above lithography tools). The acquisition fell under the category
of a ‘vertical business combination’, with the upstream market manufacturing and selling light
sources, and the downstream market manufacturing and selling lithography systems.
Historically, the JFTC has mainly focused its attention on the detailed review of horizontal
mergers and acquisitions rather than on vertical integration. However, the ASML and Cymer
case may mark the beginning of a trend of the JFTC paying increasing attention to vertical busi-
ness combinations, resulting in the acceptance of a wide range of behavioural remedies that are
more appropriate to vertical integrations. The JFTC considered the following possible competi-
tion law issues and remedies.
Upstream refusal of sale of light sources

The JFTC considered the fact that Cymer occupied a high market share of the upstream market,
in which there were few competitors. Therefore, if Cymer (following the acquisition) were to
refuse to sell krypton fluoride or argon fluoride light sources to ASML’s competitors, or sell such
products on less advantageous terms, ASML’s competitors would potentially lose the primary
procurement sources of the necessary light sources, which could result in market foreclosure
or exclusivity.
To eliminate this concern, ASML proposed that: (1) Cymer would continue to do business
with both of ASML’s main competitors under fair, reasonable and non-discriminatory terms
of trade, and would set prices in a manner that had regard to and was consistent either with
existing agreements (where such agreements existed), or (where no such agreements existed)
with industry standard; (2) Cymer would implement joint development activities with both of
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Japan
ASML’s competitors under reasonable terms of trade; and (3) for five years from the acquisition,
a report on the status of compliance with these measures would be provided to the JFTC, to be
prepared by an audit team independent from the parties (which would be appointed subject to
the JFTC’s prior approval).
Downstream refusal of purchase of light sources

The JFTC was similarly concerned that following the acquisition, ASML could refuse to deal
with or deal on less advantageous terms with Cymer’s competitors in the upstream market. If
ASML behaved in this fashion, since it occupied a high market share of the downstream market
(in which there were few competitors), competitors in the upstream market could lose sale des-
tinations and eventually be excluded from the upstream market.
To eliminate this concern, ASML proposed that: (1) when ASML develops goods in partner-
ship with either Cymer or its main competitor in the upstream market (Company A) or places
orders for products, parts or services, ASML would determine the supplier based on objective
and non-discriminatory criteria; (2) ASML would continue to permit chipmakers to choose light
sources of their choice and not unduly exert influence in favour of Cymer; (3) ASML would pro-
vide to both Cymer and Company A substantially and simultaneously the information neces-
sary in research and development of light sources and order placements for light source prod-
ucts, parts and services; and (4) ASML would provide a report under the same conditions as set
out in the subsection above on upstream refusal of sale of light sources.
Access to confidential information

The JFTC was concerned that, since manufacturers at different levels of production share
confidential information (such as product development, specification and customer details)
as part of their collaboration and developments, it was possible that Cymer would hold con-
fidential information belonging to ASML’s competitors and vice versa. There was a worry that
this information may be shared within the combined business, placing competitors in a dis
advantageous position.
To eliminate this concern, ASML proposed that: (1) directors or employees of either Cymer
or ASML who held confidential information regarding the other’s competitors would be pro-
hibited from sharing this confidential information with the other entity and have to enter into
non-disclosure agreements; (2) the parties would create a protocol of ‘information blackout’ for
its employees; and (3) ASML would provide a report under the same conditions set out in the
above subsections on upstream refusal of sale of light sources and downstream refusal of pur-
chase of light sources.
The JFTC concluded that, taking into account the various remedies that ASML proposed
implementing at both levels of the newly combined business, the acquisition would not sub-
stantially restrain competition.
Remedies for conglomerate integration: Broadcom Limited and Brocade

Communications Systems Inc
In 2017, Broadcom Limited (a world leader in the manufacture and sales of semiconductors)
notified the JFTC of its intention to acquire the entire share capital of Brocade Communications
Systems Inc (whose business involved the manufacturing and sale of hardware and software
for networks). The acquisition fell under the category of ‘vertical business combination’, with
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Japan
the upstream market being the manufacturing and selling of application-specific integration
circuits for fibre channel storage area network (FCSAN) switches, and the downstream market
being the manufacturing and selling of FCSAN switches. It was also considered to be a ‘con-
glomerate business combination’ because the FCSAN switch that is manufactured and sold by
Brocade Group, for which it has a market share of approximately 75 per cent, and the fibre chan-
nel host bus adapter (FCHBA) manufactured and sold by Broadcom Group, for which it has a
market share of approximately 45 per cent, are related products and sold to common customers
who manufacture and sell servers. While the JFTC did not have concerns in respect of the verti-
cal aspects of the integration, it had conglomerate-type issues with the business combination.
The JFTC’s main concern

The JFTC was concerned that following the proposed acquisition, the combined company group
could make the specification of the FCSAN switch exclusive to the FCHBA of the combined com-
pany group, and that by sharing competitors’ confidential information on the FCHBA, the mar-
ket could be foreclosed or lead to the combined group having exclusivity over the FCHBA market.
Remedies
To eliminate this concern, the combined company group (Broadcom Group and Brocade Group)
proposed that: (1) the combined company group secures connectivity between the FCHBA of
the competing companies and the FCSAN switch of the company group, unless it is difficult to
secure connectivity because of technical restrictions of competitors; (2) the combined company
group treats competitors’ confidential information on FCHBA as strictly confidential informa-
tion and does not use it to the advantage of its FCHBA business; (3) the activities related to the
design and development of the FCHBA of the combined company group are firewalled from the
support activities of the combined company group provided to competitors of the FCHBA; and
(4) the combined company group reports to the JFTC every two years for a total of 10 years with
respect to the compliance status of undertakings (1) to (3) above, which will be monitored by an
independent third party (monitoring consignee).
The JFTC approved the transaction based on these remedies because it considered that
remedy (1) ensures that the competitors’ FCHBA will not be adversely affected as compared
to the FCHBA of the combined company group, and that remedies (2) and (3) will ensure that
competitors will be protected from adverse effects, and the combined company will not unfairly
favour their own FCHBA business.
Remedies for integration of regional banks: Fukuoka Financial Group of

The Eighteenth Bank
In June 2016, Fukuoka Financial Group Ltd (FFG) filed a notification with the JFTC of its inten-
tion to acquire the majority shares of The Eighteenth Bank Ltd (Eighteenth Bank). Both parties
are regional banks located in the Kyushu region whose areas of business overlap in part. While
no special rule applies to the review of mergers that involve financial institutions, this case is
notable because the JFTC demonstrated how the ‘restraints of trade’ were assessed in a merger
between regional banks.
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Japan
In defining geographic markets, the JFTC conducted a survey using consumer question-
naires to assess the scope and distance enterprises located in the Nagasaki area would cover in
search of lenders. Concerning commercial loan trades for small and mid-size enterprises, FFG
and Eighteenth Bank would have held, post-merger, a combined market share as high as 75 per
cent in certain geographic areas.
The JFTC’s main concern

The JFTC was concerned that the contemplated acquisition would limit consumers’ choice in
connection with commercial loans, especially as competitive pressure in the same as well as
adjacent markets was limited and there was no pressure from new entrants.
Remedies
To address the JFTC’s concern, the parties proposed the following remedies: (1) to assign part of
their account receivables of commercial loans (for which the borrowers agree to the assignment
to competitors) with an aggregated amount of approximately ¥100 billion to competitors before
the acquisition; (2) to establish a monitoring mechanism to properly monitor and control the
lending rates of the parties; and (3) to submit periodic reports to the JFTC to ensure that the par-
ties adhere to the above remedies.
In August 2018, following an in-depth Phase II review and on the premise that the parties
would adhere to the proposed remedies, the JFTC concluded that the notified concentration
would not substantially restrain competition in any of the relevant markets.
Conclusion
Although the JFTC process as to remedies has some specificities, by and large there is a lot of
consistency with the approach to remedies in other major jurisdictions such as the EU and the
United States.
As in other jurisdictions, there is a strong case for approaching the JFTC early with viable
remedies. Unlike in many other regimes, however, the JFTC is prepared to conduct market test-
ing at a very early stage, in some cases even before the formal notification, in an effort to accel-
erate the formal review procedure. This feature of the Japanese regime coupled with the JFTC’s
inability to ‘stop the clock’ during the formal review period means that effective and timely
cooperation between the notifying parties and the JFTC case team can bring significant ben-
efits, both in terms of the overall review period and the results achieved.
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21
Mexico
Fernando Carreño and Paloma Alcantara1
Introduction
Since the establishment of the Mexican Antitrust and Competition Commission (COFECE)
(COFECE) and as a result of the new regulatory regime, merger control practice has undergone
a noteworthy and fortunate development that has had a huge and direct impact in the use of
remedies. The complexity of the transactions that have been reviewed during the past decade
has required rigorous levels of scrutiny and analysis from the authority, and remarkable levels
of knowledge of the relevant industries from practitioners.
Naturally, this results in high-level arguments and sophisticated negotiations that in some
cases may end with imposing conditions or even blocking the transaction. In 2018, for instance,
COFECE received 183 merger review notifications, from which three were blocked2 and one was
approved subject to remedies.3
Overview of the merger review process

The merger review process is a preventive tool and the antitrust authorities have to identify
any transaction that might represent a risk for the competition environment. In this regard, the
Mexican Antitrust Act (MAA) sets forth three financial and corporate thresholds4 that, when
1 Fernando Carreño is a partner and Paloma Alcantara is an associate at Von Wobeser y Sierra.
2 Files CNT-092-2017 (Wallmart de Mexico, S.A.B. de C.V. and Organizacion Soriana, S.A.B. de C.V.), CNT
072-2017 (Rheem Manufacturing Company and Rheem US Holding Inc; GIS, INGIS, S.A. de C.V. and
Futurum, Inc.) and CNT-091-2018 (Organizacion Soriana, S.A.B. de C.V., CCM Sor, S.A. de C.V., Inmobiliaria
Gleznova, S.A. de C.V., QDR Realstate, S.A. de C.V.).
3 File CNT-024-2017 (Bayer Aktienesellschaft, KWA Investment Co, and the Monsanto Company).
4 The three thresholds are: first that the price of the transaction in Mexico, namely only the companies,
subsidiaries, affiliates or assets located in Mexico that would be indirectly acquired by the acquiring
company, exceeds approximately US$79 million; second that the acquiring company, whether located
in Mexico or not, would acquire at least 35 per cent of the assets or shares of a company or companies in
Mexico whose assets or annual sales exceed approximately US$79 milion; and third that the transaction
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Mexico
exceeded, trigger the obligation of a pre-merger notification.5 COFECE is the authority responsi-
ble for reviewing all mergers except for those in the telecommunication and broadcasting sec-
tors.6 Once a merger has been notified, COFECE has to issue a decision within a period of time
specified by law. This decision can approve, impose conditions on, or object to the transaction.
Merger remedies
In those complex cases where the merger might result in a potential threat to competition in
the relevant markets, COFECE is required by law to inform the parties through its technical
secretary about its concerns at least 10 days before the date on which the case would be listed
for decision.7
Even when COFECE has the faculty to impose remedies as conditions for approval, in prac-
tice it has recognised that it is preferable that such remedies are offered by the parties, who
have a better understanding of how the remedies can be materialised, minimising the impact
on their businesses while safeguarding the competition process in the markets.
The remedies that can be imposed or accepted by COFECE can be classified as behavioural
and structural. The first ones are those related to the obligation to perform or abstain from a
specific behaviour; while the second ones, the structural remedies, modify the structure of the
market (e.g., divestitures). COFECE has also stated that the remedies can be ex-ante or ex-post.
Ex-ante remedies are suspensory conditions for the closing of the transaction, while ex-post
remedies can be complied with at a later stage, after the parties have closed the transaction.
Structural remedies are more often used for concerns raised from a horizontal merger,
while behavioural remedies are mostly employed for transactions that involve a vertical con-
cern (e.g., vertical overlaps, coordinated conducts in related markets, and crossed or linked
boards). However, COFECE’s recent trend has been to use complementary packages of struc-
tural ex-ante and behavioural ex-post remedies that are intended to increase the effectiveness
and efficiency of their decisions.
Tips for dealing with the regulator

As a result of the constitutional amendment of 2013, a new MAA. was issued, which included
several improvements to competition regulation in Mexico, especially in connection with the
pre-merger filing procedure. One of the purposes of those improvements was to make the pro-
cedure more efficient and effective.
In practice, dialogue, interaction and communication between the Commission (at all
levels) and the economic agents involved in any procedure have become crucial. This points
to the important role played by the economic agents’ local counsel during the pre-merger fil-
ing procedure.
involves the purchase in Mexico of assets or capital greater than approximately US$37 million, and the
assets or annual sales volumes of the buyer or the seller in Mexico, whatever country they are located
in, exceed approximately US$212 million.
5 Mexican Antitrust Act, Article 86.
6 The Mexican Telecommunications Institute (IFT by its acronym in Spanish) is the authority in charge
of reviewing mergers in the telecommunication and broadcasting sectors.
7 Mexican Antitrust Act, Article 90.
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Mexico
As part of this new competition legal framework, in October 2015 the COFECE issued a
non-binding document that provides guidelines for the preparation, submission and follow-up
of merger notices in Mexico (the Merger Guidelines). In the Merger Guidelines, the parameters
for the interaction and dialogue between the Commissioners and the counsel of the economic
agents is also currently regulated. This leads to the primary practical tip for dealing with the
competition authority in Mexico: beginning a dialogue. Beginning a dialogue with the author-
ity from the first moment the parties confirm the viability of any transaction that could have
effects in Mexico is essential to reaching a ruling that, no matter the outcome, results from an
efficient and organised process. Taking the first step to reach out to COFECE and maintaining
throughout the procedure efficient communications with regard to the updates of the transac-
tion is, in our opinion, the best way to ensure a fair ruling.
Several benefits arise from the interaction between the agents involved and the authority.
The authority has the opportunity to more fully understand the specifics of the transaction,
and in most cases it is advisable to create a communication channel between the business
operations areas of the agents involved and the authority. In addition, the agents can focus the
scope of the merger filing by explaining the possible efficiency gains or lack of competition risks
derived from the execution of the transaction. Furthermore, it makes the authorisation process
more efficient for all the parties, since the notifying agents learn from such formal (in writing)
or informal (through interviews, pursuant to the guidelines) communications what to focus on
and how to explain to the authority the lack of competition risks derived from the execution of
the transaction. Finally, and most importantly, it is the only opportunity the notifying parties
have to acknowledge the authorities’ competition concerns and try to overcome them by pre-
paring exceptional remedies focused on diminishing (or, if possible, eliminating) any anticom-
petitive effects that the transaction or merger could have on Mexican markets.
COFECE has shown that it is willing to keep the channels of communication open to avoid
complications and delays in resolving the matters presented to it. Therefore, it is essential that
the advisers and economic agents make an extraordinary effort to support the authority in the
analysis of the transaction, and to provide it with all the information and documentation avail-
able in order to make the procedure more efficient and the analysis more expedited, shortening
the times for issuing a ruling.
In this respect, the Commission, through the Merger Guidelines, has established the follow-
ing with regard to communications, interactions and interviews with parties to a merger filing:
7.8 Communication between COFECE and notifiers
The Commission maintains a policy of openness, dialogue and communication

with the Economic Agents that give notice of a merger, or those that wish to do
so. In this regard, the notifiers can request, at any time, a meeting with the public
officers of the Technical Secretary, the Mergers Office or the Commission Plenary.
For this, article 56 of the Bylaws stipulates the basic rules that shall be observed
when public officers of the Commission other than the Commissioners meet with
the Economic Agents to address their matters:
• There must always be at least two public officers present;
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Mexico
• The meeting requests will be made by institutional email containing the

identification of the case file, the Economic Agents or legal representatives
requesting the meeting, the people who will attend, the public officers with
whom they wish to meet and the purpose of the meeting; and
• The public officer will keep a record of the meeting in order to include it in the
record of the Commission, and it shall indicate a date and time for the meet-
ing and inform the petitioner by institutional email. Because of the usefulness
they have shown in terms of making COFECE’s analysis and the presentation
of the information by the Economic Agents more efficient, the Commission
recommends that a meeting be requested with the DGC, through the email
address indicated in the contact section of this Guide, before presenting a
merger notice, during the procedure and before presenting any proposal
for conditions.
For its part, the Commissioners can address matters with the Economic Agents
only by interview.
Article 25 of the LFCE states that for this purpose the following formalities shall
be followed:
• All the Commission Agents must be called, but the interview may be held with
the presence of just one of them.
• In each interview a record shall be kept indicating the place, date and time of
initiation and conclusion of the interview. Furthermore, the complete names
of all the attendants and the matters addressed shall be recorded. This infor-
mation will be published on the web site of the Commission.
• The interviews will be taped and stored electronically, optically or with any
other technology. These recordings will be considered reserved information
and will be available to the other Commissioners.
Thus, it is important that the advisers and areas directly involved maintain this constant dia-
logue with the Commission with regard to the notified transaction. It is also essential, apart
from fully and timely responding to any requests, to keep a communication channel open
between the Commission and the individuals and areas of the agents involved who know the
technical and operative specifics of each transaction, including sales and purchase depart-
ments, administration, finance, accounting, manufacturing and even marketing or human
resources. The agents’ representatives must act as mediators in this dialogue, to address any
and all doubts of the authority with regard to the companies, business specifics, products, ser-
vices, strategies, plans, historic data or any other information and, in general, with regard to the
market or markets on which the merger could have effects.
The agents should seek to keep the authority duly informed of any modifications to the docu-
ments (contracts, agreements, covenants, relations, corporate structure or any other documen-
tation) or information delivered. As has been seen in recent cases in Mexico, the Competition
Authority can be very sensitive to these matters, and therefore it is advisable to always keep
the authority informed as to the status of the transaction (including all agents involved and the
relationship between the parties to the transaction). Furthermore, in cases impacting multiple
jurisdictions, it is also highly recommended to give notice to the Commission on the status in
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Mexico
other jurisdictions; sometimes the agents involved have privileged access to analyses or rul-
ings issued in other jurisdictions that could be highly beneficial to present in the pending ones;
this can be an interesting driver in the decision the competition authority issues on a particu-
lar merger.
Another practical recommendation applies especially in the case of mergers that occur in
various jurisdictions, but also for transactions that have no overlap. In the United States, the
Department of Justice and the Federal Trade Commission can conclude from a preliminary
study that a merger will have no effects on free competition or trade in the country. This allows
such authorities to issue early termination notices. Early termination notices, pursuant to the
FTC’s website, may be requested by any person making an HSR filing, as explained below:
Any person filing an HSR form may request that the waiting period be termi-
nated before the statutory period expires. Such a request for ‘early termination’
will be granted only after compliance with the rules and if both the Federal Trade
Commission and Department of Justice Antitrust Division have completed their
review and determined not to take any enforcement action during the wait-
ing period.
In some instances, after a Request for Additional Information and
Documentary Material has been issued, the investigating agency will determine
that no further action is necessary and terminate the waiting period before full
compliance with the Second Request is made.8
The above takes on special importance when these notices are issued within periods less than
the statutory period under Mexican competition law, since the agents involved can submit
them to the Commission as additional evidence, and this may facilitate the process and allow
the competition authorities under any jurisdiction to exchange impressions on the transaction.
In addition to facilitating the procedure, this can expedite the ruling and ensure consistency in
global rulings (of course, taking into account the transaction’s regional particularities). To the
extent the authorities exchange impressions and points of view, they can rule as consistently
as possible.
In this respect, Debbie Feinstein, former director of Federal Trade Commission, has outlined
that the ‘[w]aivers enable more complete communication and coordination among the competi-
tion agencies, which expedites the review and leads to well informed, consistent decisions – for
all the competition enforcers.’
As an additional consequence of the reform, the new law eliminated the ordinary appeals,
which means the economic agents no longer have an opportunity to further inform the
Commission of the positive effects a merger may have on a Mexican market or markets. In par-
ticular, the reform eliminates the possibility of the agents to file through this appeal a justifica-
tion and explanation of the possible consequences of the notified merger based on an analysis
of the ruling of the Commission.
8 www.ftc.gov/enforcement/premerger-notification-program/early-termination-notices/about-early-
termination-notices.
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Mexico
Now, the agents involved are informed formally, once and without possibility of appeal or
further exchange of arguments, of the potential competition risks that concern the competi-
tion authority.
Therefore, although many think the ordinary appeals were systematically abused and
used to delay the proceedings, they also gave the economic agents the opportunity to identify
and then address the specific concerns of the competition authority. Now there are interviews
between the authority and the agents involved, but the issues the authority may raise in such
interviews are not necessarily those it would ultimately cite in the authorisation procedure.
This also illustrates the importance of initiating and maintaining constant communication
with the merger authority, seeking to identify its concerns and in this way be able to address all
the risks through the preparation and presentation of remedies that eliminate any anticom-
petitive effects that may result from the transaction. This is not to say, however, that the filing of
merger remedies ensures that the authority will not find additional risks from the merger that
could affect the markets.
In addition to the above, to have the shortest response time possible and avoid requirements
for additional information, it is vital that all the formalities of the competition law be addressed
when filing the authorisation brief, consulting the relevant areas of each agent involved and
those who are well informed about the transactions. Presenting clear and concise information,
without gaps, will avoid contradictions in the briefs that only increase the work for the author-
ity and agents involved.
Characteristics of merger remedies in Mexico

Under the new competition law, if the competition authority detects that a merger represents
risks to the competitive process, it must inform the economic agents of the risks it has iden-
tified at least 10 days prior to the date on which the matter will be listed for the ruling of the
Plenary so that it can file the merger remedies that correct those risks to competition.
This new obligation, which comes from the 2013 amendment, is regulated under article 90 of
the new Competition Law, whose parameters are regulated under article 21 of its Regulatory
Provisions, which provides that such communication to the parties shall be made through a
ruling of the Commission, summoning the notifying parties so that the Technical Secretary can
inform them of possible risks to the competitive process that have been detected.
For these purposes, the Technical Secretary issues a ruling summoning the notifying par-
ties to an interview. In this interview the Secretary tells them the possible competition risks
identified. The period to rule on the authorisation or denial is interrupted the day on which the
notifying parties present any proposal of remedies or any modification thereto, which means
the counting of the period begins again.
In cases in which the notifying parties have presented remedies at the time of presenting
their authorisation brief, they are granted the opportunity to make modifications or additions
to their initial proposal for remedies. However, under Mexican competition law this modifica-
tion can only be made once and before the matter is listed for the Plenary meeting.
It is also important to mention that in Mexico the authority is sensitive to any changes to the
information and documentation presented through the merger notice. Therefore, it is impor-
tant that the agents file any update made to any instrument, contract, agreement or any other
document presented through the merger notice, even after it is authorised and until the closing
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Mexico
occurs. Furthermore, under Mexican law parties are required to file a transaction closing writ to
inform the authority of the closing of the transaction. The fines imposed for not observing this
requirement are very high under Mexican jurisdiction.
As previously explained, for merger remedies to cover all substantial concerns of the
authority, it is essential to maintain a dialogue with the competition authority, and ‘the sooner
the better’. Under the competition law the agents involved have the right to present the condi-
tions from the time at which the authorisation request brief is filed and until one day after the
concentration is listed to be discussed by the plenary.
Once merger remedies are filed it is important to note that while the parties may only
change their remedies and scope once, the Commission may, at any time during the authorisa-
tion process, request additional information or take the actions it considers advisable in order
to have all the elements to analyse the conditions presented.
The mergers regulation in Mexico seems to encourage the economic agents to present motu
propio the merger remedies that, based on the specific knowledge they have of the market, they
think will eliminate any anticompetitive effects that could be generated. This is because they
have greater understanding of the form the merger remedies may adopt, and therefore how
they are able to minimise the merger impact without affecting the competitive process. This in
turn permits them to develop and draft the compromises they see as viable and reachable for
their business.
Another innovation under the competition law is the interview or oral hearing the eco-
nomic agents have access to during the merger authorisation process. The competition author-
ity encourages agents, in case of doubts about the relevance of certain information, to contact
the public officers of the Mergers Office to determine if the case merits it.
With respect to conditions, the competition authority in Mexico tends to impose struc-
tural conditions and behavioural conditions together. In this respect, under the competition
law in Mexico and as established in the Merger Guidelines, the conditions may be classified
under two types: behavioural and structural. The Merger Guidelines define behavioural condi-
tions as those referring to the obligation to behave in a certain manner. The structural condi-
tions are those that seek to change the structure of the market, such as the transfer of assets to
third parties.
The conditions may also be classified as prior and subsequent. According to the Merger
Guidelines, the prior conditions are those that must be met in order for the economic agents to
carry out a transaction. In the case of subsequent conditions, the economic agents can carry out
the transaction and comply with the conditions in a later stage.
Regarding the above, in Mexico structural conditions are usually imposed to remedy prob-
lems derived from horizontal mergers, and they may be complemented with behavioural con-
ditions. Behavioural conditions can resolve different problems, such as those that arise in
vertical transactions, criss-cross directory (for example, when board members, shareholders
or executives participate simultaneously in two or more companies) or when the transaction
can give rise to coordinated behaviour in other markets. In this way, the Commission evaluates
the conditions proposed to determine if they correct the negative effects that the merger could
have and may accept them or impose other conditions to ensure the competitive process. As in
other jurisdictions, the conditions imposed by the Commission are public, unless the economic
agents request and justify their classification as confidential.
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Mexico
If the competition authority issues a favourable ruling for a particular merger, subject to
compliance with conditions intended to prevent possible anticompetitive effects that could
arise from the notified merger, the economic agents must evidence that they will carry out the
acts necessary to comply with them and that the merger acts will not produce any legal effects
until the authorisation is obtained, unless the ruling so authorises. In this regard and in con-
trast to other jurisdictions, the economic agents must comply with the conditions under which
the authority has authorised the merger within the time period indicated in article 90 of the
law. Otherwise, they must give notice of the transaction again in order to be able to carry it out.
This translates into the obligation of the agents involved to comply with the conditions before
the transaction is closed.
Another new particularity of the 2013 reform was:
the strengthening of the system of sanctions that inhibit anticompetitive

behavior . . . that the COFECE can order the divestment or sale of assets, rights,
partnership interests or shares of economic agents as a specific sanction in cases
of recurrence of anticompetitive practices or if other corrective measures are not
sufficient to resolve the competition problem identified. This will be done only in
the necessary proportions to eliminate anticompetitive effects and observing the
essential formalities of the procedure, thereby safeguarding legal due process.9
In this respect, regarding conditions in merger authorisation procedures, Section IX authorises

the Commission to impose a fine of up to the equivalent to 10 per cent of the income of the eco-
nomic agent for violating the conditions established in a merger ruling, in addition to being able
to order the divestment.
The reform’s strengthening of the law was also expressed by permitting the authority
to impose criminal sanctions for non-compliance with and violation of the competition law
in Mexico.
Finally, as discussed in the first section of this chapter, there is no longer an opportunity to
refute the authority’s determination of the effects of a merger.
Multi-jurisdictional remedy coordination and timing considerations

Section 7.7 of the Merger Guidelines in Mexico provides the following:
7.7 Collaboration with authorities of other countries.

The Commission has established various collaboration agreements with compe-
tition authorities of other countries. In the framework of those agreements, it is
possible for the public officers of the Commission to hold conversations with their
counterparts in other jurisdictions on general aspects of a particular merger. The
commission preserves the confidentiality of the information it receives in its pro-
ceedings and does not disclose it to other authorities, unless it has the consent of
the Economic Agents involved to share the information with them.
9 www.gob.mx/cms/uploads/attachment/file/66454/3_Competencia_Economica.pdf pages 8 and 10.
262

Mexico
In its strategic plan for 2018–2021, the Commission reports to have 78 conventions and agree-
ments with different national and international authorities, which allow it to develop collabora-
tion activities in the national and international sphere. The Commission has also expressed its
growing interest in encouraging communication between authorities of different jurisdictions.
There are collaboration agreements between authorities not only for the study of mergers
but also in all concurring procedures and investigations, making an expedited and efficient rul-
ing possible.
In addition to the collaboration agreements that the authorities can execute, the exchange
of ideas by the competition authorities through international organisations such as the
Organisation of Economic Co-operation and Development (OECD) and the International
Competition Network (ICN) is relevant. This is expressed on the ICN website:
the ICN provides competition authorities with a specialized yet informal venue
for maintaining regular contacts and addressing practical competition con-
cerns. This allows for a dynamic dialogue that serves to build consensus and
convergence towards sound competition policy principles across the global anti-
trust community.
The ICN is unique as it is the only international body devoted exclusively to com-
petition law enforcement and its members represent national and multinational
competition authorities. Members produce work products through their involve-
ment in flexible project-oriented and results-based working groups.
These organisations may not work on specific cases or transactions, but rather they organise
annual meetings and seminars for the exchange of ideas on competition parameters, taking
advantage of technology and using the internet, teleseminars, webinars and conference calls,
so that under different jurisdictions the competition authorities may be familiar with the best
global competition practices and recommendations.
For example, the ICN and OECD have recurring initiatives to encourage and incentivise the
cooperation between competition authorities in relation to mergers. In this respect, the ICN
currently has a merger working group, which recently, through an annual conference for 2015,
presented a practical guide on mergers, and more recently it has published a Merger Remedies
Guide, which, together with the Practical Merger Guide, delineates the best international prac-
tices for the design of merger remedies.
Finally, with regard to multi-jurisdictional cooperation on merger remedies, it is our belief
that in Mexico, even though enormous and extraordinary results and improvements with
regard to global cooperation have been shown by the competition authorities, there is still a
tendency to lean towards the ‘role of the merging parties’, as the European Commission defined
it in one of its competition policy briefs, the role of the merging parties understood as to facili-
tate cooperation between different agencies, in particular when cooperation requires align-
ing the timing of the review processes and exchange of confidential information. Therefore,
the early and constructive engagement of merging parties is very important for successful
inter-agency cooperation.
263

Appendix 1
About the Authors
Paloma Alcantara
Von Wobeser y Sierra
Paloma is an associate at Von Wobeser y Sierra. She is a key member of the following areas of
the firm: commercial contracts, competition and antitrust, corporate, corporate governance,
foreign investment and mergers and acquisitions, and joint ventures. She has advised various
leading multinational companies with regard to antitrust matters in Mexico, including com-
plicated monopoly investigations and merger reviews before the Mexican Federal Economic
Competition Commission (COFECE). With regard to corporate practice work, she has advised
companies, including some listed in Fortune 500, in complex M&A matters with a competition
component. Her corporate practice advice focuses on complicated M&A transactions that have
an economic competition and antitrust component. Her experience includes the preparation
and revision of commercial contracts, and she has worked with leading corporations regarding
general compliance and housekeeping, including the keeping of corporate books.
Juan A Arteaga
Crowell & Moring LLP
Juan A Arteaga is a partner in Crowell & Moring’s antitrust and white-collar groups. His prac-
tice focuses primarily on advising companies, boards of directors, special committees and
executives on a broad range of civil and criminal antitrust matters, including litigation, merger
reviews, governmental and internal investigations, and counselling regarding various busi-
ness practices.
Between 2013 and 2017, Mr Arteaga was a senior official in the Antitrust Division of the US
Department of Justice. During this period, he served as the Deputy Assistant Attorney General
for Civil Enforcement, where he worked on and oversaw numerous civil merger and non-merger
investigations and litigations involving various industries. Mr Arteaga also served as the chief
of staff and senior counsel to the Assistant Attorney General for the Antitrust Division. While at
the Antitrust Division, Mr Arteaga worked on various high-profile merger litigations, including
265
About the Authors
the DOJ’s challenges to the Aetna/Humana, US Airways/American Airlines, Halliburton/Baker

Hughes, Electrolux/General Electric, Energy Solutions/Waster Control Specialists and National
Cinemedia/Screenvision transactions.
Mr Arteaga regularly represents Fortune 500 companies and financial institutions in con-
nection with complex transactions and high-stakes litigation and government investigations.
Mr Arteaga has been recognised as a leading practitioner by numerous professional publications
and bar associations, including the American Bar Association, New York City Bar Association,
Hispanic National Bar Association, New York Law Journal, Law360 and the Ethisphere Institute.
He has also received numerous awards for his pro bono work and civic service.
Sara Ashall
Shearman & Sterling LLP
Sara Ashall is counsel in the antitrust practice of Shearman & Sterling’s Brussels office.
She focuses on EU merger control, cartel investigations, antitrust proceedings and EU state
aid law. Sara spent five years as an associate in the Shearman & Sterling antitrust group before
moving to the technology, media and telecommunications merger unit of DG Competition
at the European Commission. This gives her unparalleled insight into the procedures and
decision-making practices of the Commission.
Sara represents clients in a range of industries including high tech, telecommunications,
pharmaceuticals and aviation before the EU and UK competition law authorities.
Julia Blanco
Cleary Gottlieb Steen & Hamilton LLP
Julia Blanco is an associate based in the Brussels office of Cleary Gottlieb Steen & Hamilton LLP.
Ms Blanco’s practice focuses on Spanish and European competition law. She joined the firm
in 2015 and holds an LLM from the College of Europe, Bruges. Ms Blanco received two (sepa-
rate) bachelor degrees in economics and law from the Pompeu Fabra University in 2012 and
2014 respectively and a double masters in legal practice and international business law from
ESADE and Luigi Bocconi University. In addition , she holds a diploma in legal studies from the
University of Oxford. Ms Blanco is a member of the Bar in Brussels and Madrid.
Paula Camara
Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados
Paula Camara is a senior associate who represents domestic and international clients in con-
nection with mergers cases and cartel investigations. She advises clients regarding complex
competitive issues and projects in regulated sectors, such as healthcare, education and finance.
Paula holds a master of laws from Stanford Law School.
Fernando Carreño
Von Wobeser y Sierra
Fernando is the head partner of the competition and antitrust practice, and he is also a partner
of the corporate and M&A practice at Von Wobeser y Sierra. He has almost 20 years of experience
and has been involved in the most important M&A deals in Mexico, offering advice on both the
antitrust and the corporate aspects of such transactions. Fernando has played an active and
266
About the Authors
important role representing clients in sophisticated and complex merger reviews, as well as in
investigations and litigations before the Federal Economic Competition Commission and the
Mexican courts. He has been involved in the majority of the cartel cases being conducted by the
Mexican Antirust Commission. Furthermore, he has acted as one of the few experts called by
the Commission to review and draft the new regulatory provisions published as a consequence
of the entry into force of the new Antitrust Law. On the cartel investigations side, he has acted as
counsel in various industries and he has been actively involved in the most notable pre-merger
filing cases. With regard to corporate matters, he has also been a main figure in some of the
largest M&As and divestitures taking place in Mexico. He has won several accolades, including
Lawyer of the Year Under 40 by Global Competition Review in 2018.
Mary T Coleman
Compass Lexecon
Dr Mary Coleman is an executive vice president at Compass Lexecon. Dr Coleman’s consulting
practice specialises in the competitive analysis of mergers and acquisitions and joint ventures,
and antitrust litigation, including class action certification issues. She has experience with a
wide range of industries, including consumer products, retailing, distribution, food packaging,
petroleum and natural gas, chemicals, coatings, industrial gases, concrete and cement, defence
industries, telecommunication, publishing, newspapers, agricultural products, paper products,
payment systems, pharmaceuticals, hospitals, physicians, medical devices, healthcare, and
computer hardware and software. She has made presentations before US and foreign antitrust
authorities and submitted expert testimony in federal court. Dr Coleman previously served as
the deputy director for antitrust in the Bureau of Economics of the Federal Trade Commission
from 2001 to 2004.
Daniel P Culley
Daniel P Culley is a partner at Cleary Gottlieb Steen & Hamilton LLP. Mr Culley’s practice focuses
on antitrust counselling and antitrust litigation. Mr Culley joined the firm in 2008. He received a
JD degree, magna cum laude, Order of the Coif, from Georgetown University Law Center in 2008,
where he was a senior articles editor for the Georgetown University Journal of Law and Public
Policy. He received an undergraduate degree in international economics, magna cum laude,
from Georgetown University School of Foreign Service in 2005. Mr Culley is a member of the Bar
in the Commonwealth of Virginia and the District of Columbia.
Margaret Segall D’Amico

Cravath, Swaine & Moore LLP
Maggie D’Amico is a partner in Cravath’s litigation department and a member of the firm’s
antitrust practice, where her practice focuses on transactional matters, antitrust regulatory
approval, government investigations and general antitrust counselling. She has advised a wide
variety of clients in diverse industries, including aerospace and aviation, pharmaceuticals, life
sciences, consumer products, media, manufacturing and technology.
267
About the Authors
Daniel P Ducore
Dan Ducore recently retired from the FTC, after more than 25 years as Assistant Director of the
Bureau of Competition’s Compliance Division. Under his leadership, the Division has drafted,
helped negotiate and enforced all of the FTC’s competition orders. The Compliance Division
also investigates violations of the pre-merger reporting law (HSR). Dan has extensive experience
overseeing and enforcing compliance with the FTC’s competition orders: merger settlements
and divestitures, and conduct violations – single firm (monopolisation or ‘abuse of dominance’)
and concerted action (unlawful agreements). He has coordinated that work with US state enforc-
ers, the European Commission, and other nations’ enforcers. He has also overseen litigation to
enforce merger remedies – obtaining civil penalties and court-ordered injunctive relief. Dan
has been a frequent speaker on panels sponsored by the American Bar Association’s Antitrust
Section, the Practicing Law Institute, the European Union’s DG-Competition, OECD, and oth-
ers, and has participated in the United States’ technical assistance missions to foreign enforc-
ers, including frequent trips to Romania as it developed its competition enforcement law and
agencies in the 1990s, and to India and China. Most recently Dan has served as a Federal Trade
Commission attorney adviser to the Antimonopoly Committee of Ukraine, as part of an ongoing
effort funded by the US Agency for International Development. Dan is a member of the District
of Columbia Bar, and a graduate of the University of Michigan School of Law (1975, cum laude,
Order of the Coif). He is a New Jersey native, and graduated from Rutgers College in 1972, magna
cum laude. He can be contacted by email (dpducore@yahoo.com) or telephone (+1 301 704 3709).
Özlem Fidanboylu
Özlem Fidanboylu is a senior associate in the antitrust practice of Shearman & Sterling’s
London office.
Özlem advises global businesses on all aspects of EU and UK competition law, with particu-
lar experience in international cartels, complex multi-jurisdictional mergers and compliance
work for dominant companies.
Özlem has coordinated complex mergers such as obtaining clearance for the GE/Alstom
merger and working for a third party to block the NYSE/Deutsche Börse merger. Through these
cases, Özlem has experience of driving mergers from different perspectives to help clients
obtain results in a pragmatic, effective and streamlined way. Additionally, Özlem has secured
merger control clearance from a number of competition authorities worldwide. Özlem has also
worked on novel issues such as advising the only non-settling party for allegedly facilitating a
cartel in a hybrid case, and working on an investigation where two competitors’ cooperation
allegedly fell outside of the R&D Block Exemption Regulation.
Özlem has worked across different industry sectors including automotive, consumer elec-
tronics, energy and financial services.
Andrew J Forman
Paul, Weiss, Rifkind, Wharton & Garrison LLP
A partner in the antitrust group, Andy Forman focuses his practice on counselling clients in
a wide range of antitrust matters, with an emphasis on mergers and acquisitions, joint ven-
tures and investigations by the US Department of Justice and US Federal Trade Commission.
268
About the Authors
Throughout his career, Andy has represented numerous leading companies including Cigna,
Eli Lilly & Company, Goodyear Tire and Rubber Co, Microsoft Corporation, Pfizer Inc., Salix
Pharmaceuticals, Ltd and US Airways Inc.
Andy previously worked for the Federal Trade Commission’s Bureau of Competition
(Mergers I), where he helped lead antitrust investigations in large mergers and acquisitions in
the pharmaceutical, medical device, consumer products, industrial products and aircraft com-
ponents industries. He has been recognised by The Legal 500, Benchmark Litigation and The Best
Lawyers in America. Andy received a JD from Georgetown University Law Center and a BA from
Washington University. He has worked on multiple matters that won the Global Competition
Review’s antitrust matter of the year.
Geert Goeteyn
Geert Goeteyn is a partner in the antitrust practice of Shearman & Sterling Brussels and London.
He focuses on all areas of EU competition, merger and regulatory law. He is qualified to prac-
tise law in Belgium as well as in England and Wales, and holds an LLM in European Law.
Geert has represented a large number of clients in a wide variety of industries includ-
ing agricultural seeds, automotive, aviation, biotechnology, consumer goods, oil, paper,
telecommunications and high-tech. He advises clients on complex antitrust issues including
merger remedy cases, cartel-related issues (both in the context of European Commission inves-
tigations and private damages actions) and abuse of dominance cases.
Geert is frequently quoted in the press, regularly contributes to books and journals and is
the editor of the aviation chapter of the Butterworths Competition Law Encyclopaedia. He has
also won a number of awards on the Cargolux case: Global Competition Review’s ‘Litigation of
the Year – Cartel Defense’ for the representation of Cargolux in the Air Cargo UK follow-on liti-
gation (2018); and Global Competition Review’s ‘Matter of the Year’ and The American Lawyer’s
‘Global Legal Award for Global Dispute of the Year: International Litigation’ for the successful
appeal by Cargolux (and a number of other carriers) against the European Commission’s deci-
sion in the Air Cargo cartel, resulting in its annulment (2016).
Francisco Enrique González-Díaz

Francisco Enrique González-Díaz is a partner based in the Brussels office of Cleary Gottlieb
Steen & Hamilton LLP. Mr González-Díaz’s practice focuses on European and Spanish compe-
tition law, including mergers and acquisitions, restrictive practices, abuse of dominance and
state aid. Mr González-Díaz joined the firm in October 2003 as a partner. He has law degrees
from the University of Granada, the Free University of Brussels and Harvard University, as well
as an economics degree from the Open University. Prior to joining the firm, Mr González-Díaz
held a number of positions within the European institutions. Between 1998 and 2003, he headed
one of the enforcement units of the European Commission’s Merger Task Force and led the
European Commission in its review of a number of large and complex cases in a wide array of
market sectors. He also represented the European Commission in a number of important legis-
lative projects relating to mergers and acquisitions and the application of Articles 81 and 82 EC.
Between 1996 and 1998, Mr González-Díaz clerked for Judge García Valdecasas at the European
Court of First Instance in Luxembourg. From 1990 to 1996, Mr González-Díaz was a member of
269
About the Authors
the European Commission’s Legal Service. His responsibilities included providing legal advice
to the European Commission, in particular to DG Competition, and representing the European
Commission before the European Courts in Luxembourg in a significant number of cases on a
wide range of issues arising under the EC Treaty.
Ilene Knable Gotts

Wachtell, Lipton, Rosen & Katz
Ilene Knable Gotts is a partner in the New York City law firm of Wachtell, Lipton, Rosen & Katz,
where she focuses on antitrust matters. Mrs Gotts is regularly recognised as one of the world’s
top antitrust lawyers, including being recognised for over the past decade in Who’s Who Legal as
one of the top 15 global competition lawyers and, in a recent edition, as the top Thought Leader in
North America, in the first-tier ranking of Chambers USA and in the ‘leading individuals’ ranking
of PLC Which Lawyer? Yearbook, being named an ‘All Star’ by BTI Consulting Group because of
her level of dedication and commitment to exceptional client service, and having been selected
as the ‘Antitrust Lawyer of the Year’ for 2016 by the Wall Street Journal’s ‘Best Lawyer’ survey.
Mrs Gotts was recently a member of the American Bar Association’s Board of Governors, serving
on the Executive Committee and as the chair of the Finance Committee. She previously served
as chair of the ABA’s Section of Antitrust Law as well as in a variety of leadership positions in
the Section for over two decades, including as the International Officer. From 2006 to 2007, Mrs
Gotts was chair of the New York State Bar Association’s Antitrust Section. An active member of
the International Bar Association’s Antitrust Committee, she is currently the North American
Representative Officer. She is currently a member of the American Law Institute. Mrs Gotts is a
frequent guest speaker, has had over 200 articles published on antitrust-related topics and has
been the editor of the ABA’s Merger Review Process handbook editions published over a period
of two decades. In 2019, Euromoney awarded Mrs Gotts with its Americas Women in Business
Law lifetime achievement award. She is currently on the advisory boards of MLex and GCR. Mrs
Gotts is a member of the Lincoln Center Counsels’ Council.
Jason Gudofsky
McCarthy Tétrault LLP
Jason is a partner in McCarthy Tétrault’s Toronto office and head of the antitrust/competition
and foreign investment group. He has acted on hundreds of mergers in a wide array of indus-
tries, including some of the highest-profile and most complex domestic Canadian and interna-
tional transactions. Jason regularly provides strategic advice to companies considering mergers
and advising their boards on competition risks. Jason is a strong and effective advocate for his
clients before the Competition Bureau under the Competition Act, and before the Investment
Review Division of ISED under the Investment Canada Act.
According to clients, Jason is ‘incredibly knowledgeable and efficient’ (Chambers Canada
2018), and he is a ‘great lawyer’ who has been cited by his peers as ‘an efficient and strategic
thinker who shows dogged determination in advancing client interests’ (Who’s Who Legal,
May 2017). Jason was recently identified as one of North America’s ‘Thought Leaders’ by Who’s
Who Legal (2018), which stated that Jason ‘is the top Canadian practitioner in this year’s
research,’ is regarded as a ‘fantastic lawyer’ who ‘stands out from other local counsel,’ and was
praised for ‘his superb responsiveness’.
270
About the Authors
Dustin F Guzior
Sullivan & Cromwell LLP
Mr Guzior is a partner in Sullivan & Cromwell’s litigation group. He has substantial experience
advising clients on investigations of prospective mergers and acquisitions by competition
authorities around the world, including the Antitrust Division of the US Department of Justice
and the Federal Trade Commission. Mr Guzior has handled merger investigations in many dif-
ferent industries, including pharmaceuticals, financial services, agricultural inputs, power dis-
tribution and transmission components, semiconductor manufacturing equipment, telephony,
and industrial equipment rental services. Mr Guzior also has worked on Section 1 and Section
2 investigations in commodity chemical businesses, financial services and travel management
services. Most recently, he was the senior associate managing US antitrust clearance for Bayer
AG’s acquisition of Monsanto Company.
Mr Guzior also has handled a number of intellectual property disputes involving patents,
licensing, trade secrets, unfair competition, and the intersection of antitrust and IP issues.
Most recently, he was a member of the trial team representing BlackBerry in its successful
US$1 billion patent licensing dispute with Qualcomm.
John Handoll
Shardul Amarchand Mangaldas & Co
John Handoll is a senior adviser in European and competition law, and the national practice
head of competition law with Shardul Amarchand Mangaldas. He is a specialist competi-
tion and regulatory lawyer with extensive experience of 40 years, and has worked in a num-
ber of European jurisdictions – notably the United Kingdom, Belgium (EU competition law)
and Ireland. Bringing his European and international experience to bear, he has worked with
Indian lawyer members of the New Delhi competition team in relation to a number of mat-
ters before the CCI, Appellate Tribunal and the Indian courts. This has included advising on
merger notifications (including multi-jurisdictional filings), antitrust (including cartel inves-
tigations and leniency applications) and alleged abuse of dominance. John has also advised a
number of Indian and multinational companies on compliance programmes and on preparing
for dawn raids. He has also previously acted as non-governmental adviser in the International
Competition Network, working in the areas of mergers, cartels and unilateral behaviour. Widely
acclaimed as a top practitioner of European and competition law by a number of international
media and legal publications, John also lectures and publishes widely.
John Harkrider
Axinn
John Harkrider is a founding partner of Axinn and is ranked at Tier 1 in Chambers. He was
global lead counsel on Thermo Fisher’s acquisition of Life Technologies, Dell’s acquisition
of EMC and Ball Corporation’s acquisition of Rexam PLC. He was also counsel to Google in its
acquisition of Motorola Mobility. He has litigated three different merger challenges, most nota-
bly Tyson Foods’ sale of assets to Georges, SunGard’s acquisition of Comdisco, and Omnicare’s
proposed acquisition of Pharmerica. He was GCR’s Lawyer of the Year and has been shortlisted
for Dealmaker of the Year. He was also named as American Lawyer Litigator of the Week for his
representation of Google before the FTC.
271
About the Authors
Ronan P Harty
Davis Polk & Wardwell LLP
Ronan Harty is a partner in Davis Polk’s Litigation Department. He provides general antitrust
counselling to US and non-US companies and represents clients in enforcement agency investi-
gations, domestic and cross-border acquisitions and joint ventures, and litigations.
Mr Harty joined Davis Polk in 1986. He received a Bachelor of Civil Law from University
College, Dublin with first-class honours in 1984. In 1986, he received an LLM from the University
of Michigan Law School, where he was awarded a Cook Fellowship for Legal Research. In 1991,
he served as an assistant (stagiaire) in the Cabinet of Sir Leon Brittan, Vice President of the
European Communities Responsible for Competition Policy.
Natalie M Hayes
Weil, Gotshal & Manges LLP
Natalie M Hayes is an associate in Weil’s antitrust practice group. Her practice focuses on
mergers & acquisitions, government investigations, civil litigation, and antitrust compliance
matters across a broad range of industries. Ms Hayes is the managing editor of the American
Bar Association’s Cartel & Joint Conduct Review, and has contributed to its Annual Review of
Antitrust Law Developments and Telecom Antitrust Handbook. While in law school, Ms Hayes
worked as a law clerk at the Federal Trade Commission in Commissioner Joshua Wright’s office
and in the Mergers I Division of the Bureau of Competition. Prior to and during law school, Ms
Hayes worked as an economist at the US Bureau of Economic Analysis on the national income
and product accounts.
David Higbee
David Higbee is a partner in the antitrust practice of Shearman & Sterling’s Washington,
DC office.
He focuses on antitrust government and internal investigations, merger review, and com-
plex litigation matters. He has represented clients in varied industries including defence, oil
and gas, financial services, and technology. David works regularly on matters before the Federal
Trade Commission and the Antitrust Division of the US Department of Justice.
David previously served at the Department of Justice as Deputy Assistant Attorney General
and Chief of Staff of the Antitrust Division. In that capacity, he advised the Assistant Attorney
General on all matters related to the enforcement of the US antitrust laws and oversaw inves-
tigations, civil litigation and criminal prosecutions. At the Department of Justice, David also
served as Deputy Associate Attorney General and as counsel to the US Attorney General and
White House Liaison. He was designated a Special Assistant US Attorney. David recently led
transition planning for the Antitrust Division during the change in administrations.
David also served at the White House under President George W Bush as Special Assistant to
the President and Associate Director for Presidential Personnel, advising the President on the
appointment of senior officials throughout the executive branch.
272
About the Authors
Steven L Holley
Sullivan & Cromwell LLP
Steven Holley is a senior partner in Sullivan & Cromwell’s litigation group, and his practice has
focused for many years on antitrust matters. He has extensive experience advising clients on
competition issues, including reviews of prospective mergers and unilateral conduct investiga-
tions by the Federal Trade Commission, the Antitrust Division of the US Department of Justice,
and state attorneys general. For more than a decade, he represented Microsoft in the web of gov-
ernmental enforcement actions and civil litigation brought by competitors and consumers, all
related to the design and marketing of Microsoft’s PC operating systems.
Mr Holley’s practice has addressed a wide variety of industries, including oil and gas explo-
ration and production, extraction and refining of primary metals, distilled spirits, automo-
tive components, microprocessors, pharmaceuticals, electricity generation, medical imaging
equipment, newspaper publishing and computer software. He has particular expertise in han-
dling large and complicated cross-border transactions that require mergers clearances in mul-
tiple jurisdictions. He represented Bayer in its recently closed acquisition of Monsanto, and he
is currently representing Praxair in its merger with Linde – both transactions were valued in
excess of US$65 billion, with substantial antitrust issues and mandatory filings in more than
20 countries.
Daniel J Howley
A counsel in the antitrust group, Dan Howley advises clients on antitrust matters, including liti-
gation, mergers and acquisitions, and civil and criminal investigations by the US Department
of Justice and the Federal Trade Commission. He also has significant experience in commercial
litigation involving contractual disputes, business torts and shareholder class action and deriv-
ative claims. His notable clients include Cigna, Nestlé, AK Steel Holding Corp, the US Treasury
and Microsoft.
Dan has had key roles in numerous high-profile matters including the Cigna/Express Scripts
transaction (nominated for ‘Merger Control Matter of the Year – Americas’ at the 2019 Global
Competition Review Awards), the defence of Nestlé USA in the Chocolate Confectionary
Antitrust Litigation (nominated for 2015 ‘Litigation of the Year - Cartel Defence’), and the US
Airways/American Airlines merger (2014 Matter of the Year Award winner). Dan received
a JD from the University of Pennsylvania Law School and an undergraduate degree from
Duke University.
Molly M Jamison
Molly M Jamison is an associate in Cravath’s litigation department.
Nathan Kiratzis
Nathan Kiratzis is an associate in Davis Polk’s Litigation Department. He earned his LLB (Hons)
and BCom in Economics from the University of Melbourne in 2008. He received a Graduate
Diploma in Competition Law from the University of Melbourne Law School in 2016.
273
About the Authors
Anna M Kozlowski
Anna Kozlowski is an associate in Davis Polk’s Litigation Department. She earned a BA, cum
laude, in Political Science from Boston College in 2011, and earned her JD, with honours, from
The George Washington University Law School in 2016.
Kate McNeece
Kate’s practice encompasses all aspects of competition law, including mergers and acquisi-
tions, marketing and distribution practices, abuse of dominance, criminal and civil investiga-
tions, and compliance matters. She also provides strategic advice on foreign investment merger
review under the Investment Canada Act, including with respect to state-owned enterprise
investment and national security issues. She has worked with clients in a number of Canada’s
key industries including upstream and downstream energy, renewable energy, construction,
telecommunications and consumer products.
Carrie C Mahan
Weil, Gotshal & Manges LLP
Carrie C Mahan is a partner in Weil’s Washington, DC, office, where her antitrust practice focuses
on mergers, antitrust class actions and private litigation, as well as government investigations.
Ms Mahan has extensive experience representing clients in all of the major antitrust venues,
including both state and federal courts and federal, state and international competition enforce-
ment agencies. Her ability to develop unique arguments under complex antitrust theories has
led her to play a leading role in the defence and overall strategy for many key clients, including
large joint defence groups. She also provides general antitrust counselling, such as assisting cli-
ents in developing novel strategies for improving compliance programmes and mitigating risk.
Aparna Mehra
Aparna Mehra is a partner in the firm’s competition law practice and has over 10 years of exten-
sive experience, particularly in the Indian merger control regime. She is a merger control spe-
cialist and has been involved in a number of high-profile merger control matters, leading the
charge in notifications and, where necessary, negotiating remedies. She has also played an
important role in the finalisation of the Indian merger control regime in April–May 2011, work-
ing closely with the government of India and the Competition Commission of India in relation
to the draft Combination Regulations and associated exemption measures.
Prior to venturing into competition law, Aparna was involved in a number of M&A trans-
actions and practised general corporate commercial law by advising clients on regulatory and
compliance issues in various sectors.
She has co-authored several competition law publications, such as the India chapter of
the upcoming Private Equity Antitrust Handbook, published by the American Bar Association,
‘Navigating through Indian Merger Control, Trends and Challenges’, published in USIBC Legal,
and the India chapter of the Antitrust Chronicle – Antitrust Developments in Asia Pacific, pub-
lished by Competition Policy International.
274
About the Authors
Aparna represented Monsanto in the Bayer/Monsanto transaction for India, which won
the Matter of the Year at the Global Competition Review Awards, 2019. She has been listed as a
foremost practitioner under 45 in Who’s Who Legal: Competition – Future Leaders. In addition,
she is recognised as a Rising Star in Competition and Antitrust in The Experts Guides list for
2018 and 2019.
Justin Menezes
Mazars
Justin Menezes heads the monitoring trustee services team at the Brussels and London offices
of Mazars. Prior to joining Mazars, Justin was director of the Brussels office of monitoring trus-
tee firm CompetitionRx. Before moving into the field of monitoring trustee work, Justin was
part of the competition and regulatory practices of two leading international law firms based
in Brussels.
Justin has served as a regulator through his positions as official for DG Competition ensur-
ing the proper implementation of remedies, at the Office of Fair Trading and the European Free
Trade Association Surveillance Authority. Justin qualified as a barrister in 1995 in the United
Kingdom; he is also a member of the Brussels Bar.
He regularly acts as monitoring trustee and has acted as trustee in relation to cases involv-
ing the European Commission and other competition authorities throughout Asia, Latin
America and the United States.
Justin has particular expertise in both the design and implementation of remedies, having
co-authored the 2005 Remedies Study, which reviewed the Commission’s remedies policy and
contributed to the adoption of the 2008 Remedies Notice.
Justin has written and presented extensively in relation to remedies cases and policy.
Diana L Moss
American Antitrust Institute
Diana Moss is president of the American Antitrust Institute (AAI). Before 2015, she was AAI’s
vice president. An economist, Dr Moss has developed and expanded AAI’s research, education
and advocacy, and strengthened communications with enforcers, Congress, advocacy groups
and industry. Her work spans antitrust and regulation with expertise in energy, agriculture, air-
lines, telecommunications and healthcare. Before joining AAI, Dr Moss was a senior economist
at the Federal Energy Regulatory Commission where she coordinated competition analysis for
electricity mergers and contributed to major rulemakings on merger, transmission access and
market-based rate policies. She has also consulted in private practice in the areas of public util-
ity regulation and antitrust. Dr Moss has spoken widely, testified before Congress, appeared
before state and federal authorities, and made numerous radio and television appearances.
She has published articles in a number of academic journals, including American Economic
Review, Journal of Industrial Organization, the Energy Law Journal and the Antitrust Bulletin.
She is editor of Network Access, Regulation and Antitrust (2005). Dr Moss is Adjunct Faculty in
the Department of Economics at the University of Colorado at Boulder. She holds an MA degree
from the University of Denver and a PhD from the Colorado School of Mines.
275
About the Authors
Vassili Moussis
Anderson Mōri & Tomotsune
Vassili Moussis is an English-qualified lawyer whose practice focuses on EU and international
competition law, with a particular emphasis on inbound and outbound merger control and
international cartel matters. Having trained at the European Commission’s DG Competition
and practised in the competition teams of leading UK and US law firms in Brussels and London,
Vassili has been based in Tokyo with Anderson Mōri & Tomotsune for over 10 years now.
Vassili is recognised as a leading individual for antitrust and competition law in Japan by
Chambers, The Legal 500: Asia Pacific and Who’s Who Legal: Japan.
Julie A North
Julie A North is a partner in Cravath’s litigation department. Her broad litigation practice
encompasses general commercial, securities, and mergers and acquisitions litigation, among
other areas. Ms North advises clients on antitrust regulatory clearance issues in connection with
mergers and acquisitions, and her clients span diverse industries, including consumer products,
financial services, healthcare, telecommunications and manufacturing. Ms North also has expe-
rience in advising and defending clients in matters involving the Foreign Corrupt Practices Act.
Michael O’Mara
Axinn
Michael J O’Mara is an associate in Axinn’s Washington, DC office, whose practice is focused on
merger review, antitrust counselling and antitrust litigation. He has also worked on merger fil-
ings and investigations in the US before both the Federal Trade Commission and the Department
of Justice, as well as in the European Union, Australia, Austria, Brazil, Canada, China, Germany,
India, Israel, Japan, Mexico, Russia, South Africa, South Korea, Switzerland, Taiwan, Turkey and
others. He was the lead associate in Axinn’s representation of Dell Technologies’ acquisition of
EMC Corporation.
Michael received his undergraduate degree in Public Policy and American Institutions from
Brown University and JD from Duke University School of Law. Prior to attending law school,
Michael worked as a research assistant for the New England Public Policy Center at the Federal
Reserve Bank of Boston.
Djordje Petkoski
Djordje Petkoski is a partner in the antitrust practice of Shearman & Sterling’s Washington,
DC, office.
He focuses on cartel investigations, complex antitrust litigation and strategic counselling,
with an emphasis on antitrust and competition law.
Djordje has a broad competition law practice with a focus on criminal antitrust matters. He
has represented over a dozen corporate and individual clients in cartel investigations by the US
Department of Justice and enforcers in other jurisdictions, including as lead counsel for signifi-
cant corporate clients. He has also served as lead counsel for corporate clients involved in civil
class actions that follow Department of Justice investigations.
276
About the Authors
Djordje conducted internal investigations relating to potential criminal violations of the

Foreign Corrupt Practices Act, US international trade laws, environmental laws and obstruc-
tion of justice conduct. He has also represented plaintiffs and defendants in multi-district and
other complex litigation involving a variety of antitrust, RICO, Lanham Act and other claims.
He regularly counsels clients on a variety of antitrust and competition matters and works
with clients to design and implement compliance programs and incorporate compliance into
corporate strategy. Djordje has written extensively on compliance and antitrust issues, has
served as a panellist on these issues at American Bar Association events and has taught classes
on compliance and antitrust at the Wharton Business School, including executive education
courses attended by Fortune 500 compliance officers and senior risk managers.
Caroline Préel
Caroline Préel is an associate in the antitrust practice of Shearman & Sterling’s Brussels office.
Caroline’s practice focuses on EU competition law, including general antitrust counselling
and representing clients in antitrust litigations and investigations, and she assists clients with
review of mergers and acquisitions before the European Commission. She has counselled cli-
ents in a variety of industries, including high tech, air transport, telecommunications, energy
and speciality chemicals.
Prior to joining Shearman & Sterling, Caroline has acquired experience working at the
Directorate General for Competition of the European Commission (DG COMP), in the Mergers,
Energy and Environment Unit.
Charles F (Rick) Rule

A partner and co-chair of the antitrust group, Rick Rule provides antitrust advice to major inter-
national corporations on ‘bet-the-company’ matters, including M&A, criminal and civil inves-
tigations by the US Department of Justice and US Federal Trade Commission, and trial and
appellate litigation. Over the past 30 years, Rick has advised on a number of the highest profile
antitrust matters, including representing Exxon in its merger with Mobil, leading the team for
Microsoft that settled its antitrust case with the DOJ and representing US Airways in its merger
with American Airlines.
Rick began his career in the Antitrust Division of the Department of Justice, becoming, in
1986, the youngest person ever confirmed as the head of the Division. Rick left the Department
in 1989 and has since been a partner and head of antitrust practices at several leading New
York and DC firms. Rick received a JD from the University of Chicago Law School and a BA from
Vanderbilt University.
Debbie Salzberger
Deborah (Debbie) Salzberger is a partner in McCarthy Tétrault’s antitrust/competition and for-
eign investment group in Toronto. She acts for clients in domestic and multinational mergers
and acquisitions with respect to competition and antitrust law, and foreign investment review
277
About the Authors
matters. She also regularly provides competition law compliance advice in respect of criminal
cartel matters and reviewable practices, including joint ventures, resale pricing, advertising and
distribution issues.
Shweta Shroff Chopra

Shweta Shroff Chopra has over 15 years’ experience in the competition field and has been
involved in several high-profile cases relating to cartels, abuse of dominance and merger
control. She worked closely with the government of India and the CCI in finalising the draft
Combination Regulations and associated exemption notifications. She also contributed to the
drafting of the national competition policy of India. Shweta is also a non-governmental adviser
to the International Competition Network from India.
Shweta featured in Global Competition Review’s Women in Anti-Trust, 2016. She has also
been recognised for her professional achievements in Who’s Who Legal: Competition every year
since 2013. In the Chambers and Partners rankings 2019, Shweta continued to be ranked in Band 2.
She won the ‘Young Lawyer of the Year (Female)’ Award at the Legal Counsel Congress & Awards
2014 and was selected by the international in-house counsel community as an outstanding
practitioner in the Euromoney Guide to the World’s Leading Competition and Antitrust Lawyers/
Economists. In 2016, Shweta was featured by Legal Era in its list of ‘Under 40 Rising Stars’. Sweta
regularly lectures and contributes to competition law publications and has co-authored leading
guides on merger control in India.
John Skinner
John Skinner is an associate in the antitrust practice in Shearman & Sterling’s New York office.
He focuses on US and multi-jurisdictional merger review and antitrust law. He has coun-
selled clients and coordinated merger control reviews for transactions in a variety of sectors,
including agrochemicals, life sciences, consumer goods, hospitality and automotive.
Marcio Soares
Marcio Soares regularly represents clients from various industries in a wide range of antitrust
matters, including high-profile merger review cases, cartels and dominance investigations,
antitrust-related litigation and general antitrust counselling. Marcio is a member of the board
of the Brazilian Institute for the Study of Competition, Consumer Affairs and International
Trade, and of the Working Group on International Cartels of the International Bar Association
(IBA), and he also lectures as a visiting professor on the LLM programme of Fundação Getúlio
Vargas in Rio de Janeiro. Marcio has been recognised by a great number of specialist publica-
tions as a leading antitrust practitioner in Brazil (Chambers Latin America, The Legal 500, Who’s
Who Legal and LACCA).
278
About the Authors
Pablo Trevisán
Comisión Nacional de Defensa de la Competencia
Pablo Trevisán is a Commissioner at the Comisión Nacional de Defensa de la Competencia,
which is the Competition Authority for Argentina, pending recent legislative changes. He was
the co-drafter of the Argentine Competition Law 27,442, enacted in May 2018. Between 2001 and
2015, he was a partner at Estudio Trevisán Abogados. He is a visiting research fellow at Fordham
School of Law, in the United States. He is an author, speaker and professor at Torcuato Di Tella
University and the Pontificia Universidad Católica Argentina, where he is also working towards
a PhD, with his thesis being on antitrust damages. He is a member of the international advisory
board at the Institute of Comsumer Antitrust Studies, Loyola University, Chicago. He is the US
member of the American Bar Association’s antitrust section’s task force on the future of compe-
tition law standards. He has an LLM from the London School of Economics and Political Science.
Yoshiharu Usuki
Yoshiharu Usuki is a partner at Anderson Mōri & Tomotsune with broad experience in the area
of antitrust/competition law. In the competition area, he is particularly experienced in Japan
Fair Trade Commission cartel investigations and other foreign competition authority cartel
investigations, bid rigging and other serious alleged violations. He is also broadly experienced
in antitrust and competition matters relating to dominance regulations, mergers and acquisi-
tions, joint ventures, distribution agreements and licence agreements. In addition to his pro-
fessional experience at Anderson Mōri & Tomotsune, he worked for the competition practice
group at a UK-based law firm as a foreign lawyer (2014–2015).
Christine A Varney
Christine A Varney is a partner in Cravath’s litigation department and serves as the chair of the
firm’s antitrust practice. She has been widely recognised as one of the leading antitrust law-
yers in the United States in both private practice and in government service, and she is the only
person to have served as both the US Assistant Attorney General for Antitrust and as a com-
missioner of the Federal Trade Commission. Ms Varney formulates global antitrust strategy for
clients in connection with joint ventures, mergers, acquisitions, dispositions and other busi-
ness transactions, including advising on business conduct or potential investments to ensure
compliance with antitrust laws, securing antitrust regulatory approvals, and handling internal
and governmental investigations into anticompetitive behaviour.
David A Weiskopf
Compass Lexecon
Dr David Weiskopf is an executive vice president at Compass Lexecon and a member of the
faculties at the Lindner College of Business at the University of Cincinnati and Johns Hopkins
University. Dr Weiskopf specialises in industrial organisation, microeconomic analysis, con-
sumer behaviour, applied econometrics and statistics, and labour economics. He has testified
as an expert witness in private litigation regarding antitrust issues, economic damages and
consumer behaviour. He has also published articles on merger simulation, demand estimation,
279
About the Authors
market definition for intermediate goods and consumer complaint rates. He has presented
theoretical and empirical papers at academic conferences, and has co-authored numerous eco-
nomic studies that have been presented to antitrust enforcement agencies around the world.
Yi Xue (Josh)
Zhong Lun Law Firm
Yi Xue (Josh) is a partner at Zhong Lun Law Firm and is one of the pioneering lawyers practis-
ing competition law in China. From 2008, he represented a substantial number of well-known
multinational and Chinese domestic clients, in more than 100 merger-control reviews in con-
nection with offshore and inbound M&A transactions concerning various industries. He also
advised a number of high-profile clients on matters of antimonopoly administrative investi-
gation, antitrust compliance,and antitrust litigation. He has rich experience in areas of M&A
as well.
Yi Xue has been highly recommended by Chambers Asia-Pacific continuously from 2013 to
2019 as a leading lawyer in the area of competition and anti-monopoly law. He also has been
widely awarded by Asian Legal Business (Client Choice Top 20, 2013), Legal 500 (Competition,
2017 – 2019), and Who’s Who Legal (Competition, 2017 – 2019).
Kiyoko Yagami
Kiyoko Yagami is a partner at Anderson Mōri & Tomotsune, working mainly in the fields of anti-
trust and competition law. Before joining Anderson Mōri & Tomotsune, she worked as a trainee
in the Beijing office of a leading global firm and in the Economic Affairs Bureau of the Ministry of
Foreign Affairs of Japan. She has extensive experience in handling merger filings with the Japan
Fair Trade Commission and major foreign competition authorities. She is also experienced in
international dispute resolution involving antitrust issues, and other competition law-related
matters such as joint ventures, dominance issues and distribution arrangements.
Renata Zuccolo
Renata Zuccolo has approximately 15 years of practice in the antitrust area (seven of which in
Mattos Filho); she represents domestic and international clients in connection with mergers
cases, cartel, abuse of dominance investigations, court proceedings, audits, and the develop-
ment and implementation of competition compliance programmes, as well as advising clients
in trade defence cases in different industries. She holds a master of laws from Kings College,
London. She is a member of the Brazilian Institute for the Study of Competition, Consumer
Affairs and International Trade. Renata has been recognised by LACCA in 2017 and 2018.
280
Appendix 2
Contributors’ Contact Details
Anderson Mōri & Tomotsune Cleary Gottlieb Steen &

Otemachi Park Building Hamilton LLP
1-1-1 Otemachi, Chiyoda-ku Rue de la Loi 57
Tokyo 100-8136 1040 Brussels
Japan Belgium
Tel: +81 3 6775 1000 Tel: +32 2 287 2000
vassili.moussis@amt-law.com Fax: +32 2 231 1661
yoshiharu.usuki@amt-law.com fgonzalez-diaz@cgsh.com
kiyoko.yagami@amt-law.com dculley@cgsh.com
www.amt-law.com jblanco@cgsh.com
www.clearygottlieb.com
Axinn
114 West 47th Street Comisión Nacional de Defensa
New York, NY 10036 de la Competencia
United States Reconquista 46
Tel: +1 212 728 2200 7th Floor
Fax: +1 212 728 2201 C1003ABB
jharkrider@axinn.com Buenos Aires,
Argentina
950 F Street, NW Tel: +5411 4349-3480/4125
Washington, DC 20004 pablotrevisan@gmail.com
United States www.argentina.gob.ar/
Tel: +1 202 912 4700 defensadelacompetencia
Fax: +1 202 912 4701
momara@axinn.com
www.axinn.com
281
Compass Lexecon McCarthy Tétrault LLP

555 12th Street NW, Suite 501 66 Wellington Street West
Washington, DC 20004 Suite 5300, TD Bank Tower
United States Toronto
Tel: +1 202 753 5200 Ontario, M5K 1E6
Fax: +1 202 753 5280 Canada
mcoleman@compasslexecon.com Tel: +1 416 362 1812
dweiskopf@compasslexecon.com Fax: + 416 868 0673
www.compasslexecon.com jgudofsky@mccarthy.ca
dsalzberger@mccarthy.ca
Cravath, Swaine & Moore LLP kmcneece@mccarthy.ca
825 Eighth Avenue www.mccarthy.ca
New York, NY 10019
United States Mattos Filho, Veiga Filho, Marrey
Tel: +1 212 474 1000 Jr e Quiroga Advogados
Fax: +212 474 3700 Alameda Joaquim Eugênio de Lima, 447
cvarney@cravath.com São Paulo, CEP 01419-001
jnorth@cravath.com Brazil
mdamico@cravath.com Tel: +55 11 3147 7600
mjamison@cravath.com Fax: +55 11 3147 7770
www.cravath.com msoares@mattosfilho.com.br
renata.zuccolo@mattosfilho.com.br
Crowell & Moring LLP paula.camara@mattosfilho.com.br
590 Madison Avenue www.mattosfilho.com.br
New York, NY 10022
United States Mazars
Tel: +1 212 803 4053 Tower Bridge House
Fax: +1 212 223 4134 St Katharine’s Way
jarteaga@crowell.com London E1W 1DD
www.crowell.com United Kingdom
Tel: +32 477 5754 32/+44 7881 284080
Davis Polk & Wardwell LLP justin.menezes@mazars.co.uk
450 Lexington Avenue www.mazars.co.uk
New York, NY 10017
United States Paul, Weiss, Rifkind, Wharton &
Tel: +1 212 450 4000 Garrison LLP
Fax: +1 212 701 5800 2001 K Street, NW
ronan.harty@davispolk.com Washington, DC 20006-1047
nathan.kiratzis@davispolk.com United States
anna.kozlowski@davispolk.com Tel: +1 202 223 7300
www.davispolk.com Fax: +1 202 223 7420
rrule@paulweiss.com
aforman@paulweiss.com
dhowley@paulweiss.com
www.paulweiss.com
282
Shardul Amarchand Mangaldas Von Wobeser y Sierra, SC

& Co Paseo de los Tamarindos 60, 4th Floor
Amarchand Towers Bosques de las Lomas
216 Okhla Industrial Estate, Phase III Cuajimalpa de Morelos, 05120
New Delhi 110020 Mexico City
India Mexico
Tel: +91 11 41590700/40606060 Tel: +52 55 5258 1000
Fax: +91 11 26924900 fcarreno@vwys.com.mx
john.handoll@amsshardul.com palcantara@vwys.com.mx
shweta.shroff@amsshardul.com www.vonwobeserysierra.com
aparna.mehra@amsshardul.com
www.amsshardul.com Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
Shearman & Sterling LLP New York, NY 10019
401 9th Street, NW United States
Washington, DC, 20004 Tel: +1 212 403 1247
United States Fax: +1 212 403 2247
Tel: +1 202 508 8000 ikgotts@wlrk.com
david.higbee@shearman.com www.wlrk.com
djordje.petkoski@shearman.com
geert.goeteyn@shearman.com Weil, Gotshal & Manges LLP
sara.ashall@shearman.com 2001 M Street, NW
ozlem.fidanboylu@shearman.com Suite 600
caroline.preel@shearman.com Washington, DC 20036
john.skinner@shearman.com United States
www.shearman.com Tel: +1 202 682 7000
Fax: +1 202 857 0904
Sullivan & Cromwell LLP carrie.mahan@weil.com
125 Broad Street natalie.hayes@weil.com
New York, NY 10004 www.weil.com
United States
Tel: +1 212 558 4000 Zhong Lun Law Firm
Fax: +1 212 558 3588 28, 31, 33, 36, 37F, SK Tower
holleys@sullcrom.com 6A Jianguomenwai Avenue
guziord@sullcrom.com Chaoyang District
www.sullcrom.com Beijing 100022
China
Tel: +86 10 59572288
Fax: +86 10 65681838
xueyi@zhonglun.com
www.zhonglun.com
283
Successfully remedying the potential anticompetitive effects of a
merger can be more of an art than a science. Not only is every deal
specific, but, as noted in the introduction, every remedy contains
an element of ‘crystal ball-gazing’; enforcers must look into the
future and successfully predict outcomes.
As such, practical guidance for both practitioners and
regulators in navigating this challenging environment is critical.
This second edition of the Merger Remedies Guide – published by
Global Competition Review – provides such detailed guidance and
analysis. It examines remedies throughout their life cycle: from
the fundamental principles; to the remedies available; through
how remedies are structured and implemented; to how enforcers
ensure compliance. Insights from around the world, ranging from
Brazil to China, supplement the global analysis to inform the reality
of multi-jurisdictional deals.
The Guide draws not only on the wisdom and expertise of 46
distinguished practitioners from 18 firms, but also the perspective
of current and former enforcers Pablo Trevisán, Daniel Ducore and
Diana Moss. It brings together unparalleled proficiency in the field
and provides essential guidance for all competition professionals.
Visit globalcompetitionreview.com
Follow @GCR_alerts on Twitter
Find us on LinkedIn
ISBN 978-1-83862-220-6

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CRAVATH, SWAINE & MOORE LLP

CROWELL & MORING LLP

DAVIS POLK & WARDWELL LLP

DIANA L MOSS/AMERICAN ANTITRUST INSTITUTE

MCCARTHY TÉTRAULT LLP

MATTOS FILHO, VEIGA FILHO, MARREY JR

PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP

SHARDUL AMARCHAND MANGALDAS & CO

SHEARMAN & STERLING LLP

SULLIVAN & CROMWELL LLP

WACHTELL, LIPTON, ROSEN & KATZ

WEIL, GOTSHAL & MANGES LLP

ZHONG LUN LAW FIRM

Part I: Overarching Principles and Considerations

4 Realigning Merger Remedies with the Goals of Antitrust����������������������������������������������������������35

Part II: Types of Remedies

7 Antitrust Remedies in Highly Regulated Industries��������������������������������������������������������������������70

Part III: Process and Implementation

9 Identifying a Suitable Divestiture Buyer and Related Issues�����������������������������������������������������93

Part IV: Compliance

Part V: Remedy Negotiations: Practical Considerations

14 Negotiating the Remedy: A Practitioner’s Perspective��������������������������������������������������������������168

Part VI: Merger Remedies Insights from around the Globe

Ronan P Harty, Nathan Kiratzis and Anna M Kozlowski1

© Law Business Research 2019

The US Federal Trade Commission’s 2017 Report

© Law Business Research 2019

The UK Competition and Markets Authority 2017 Report

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© Law Business Research 2019

The Canadian Competition Bureau’s 2011 Report

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The European Commission’s Directorate-General for Competition’s 2005

The GCR Merger Remedies Guide

40 DG Comp, Merger Remedies Study (2005), available at http://ec.europa.eu/competition/mergers/

© Law Business Research 2019

© Law Business Research 2019

© Law Business Research 2019

© Law Business Research 2019

A fundamental process consideration, particularly in the context of multi-jurisdictional

© Law Business Research 2019

© Law Business Research 2019

63 ICN, Merger Remedies Guide (2016), available at https://www.internationalcompetitionnetwork.org/

© Law Business Research 2019

© Law Business Research 2019

Ilene Knable Gotts1

Core universal goal: preserving competition

1 Ilene Knable Gotts is a partner at Wachtell, Lipton, Rosen & Katz.

© Law Business Research 2019

The touchstone principle . . . in analyzing remedies is that a successful merger

4 Realigning Merger Remedies with the Goals of Antitrust��35

7 Antitrust Remedies in Highly Regulated Industries��70

9 Identifying a Suitable Divestiture Buyer and Related Issues��93

14 Negotiating the Remedy: A Practitioner’s Perspective��168