Antitrust News is a new feature at The Antitrust Attorney Blog. We will periodically report on and address new developments in the antitrust world, from FTC or DOJ guidance to important court decisions to relevant legislative developments to worldwide antitrust issues.
Although some of our prior articles involve antitrust developments, most of these posts consist of content that is less timely and more evergreen. Our intent is to help our readers by describing Antitrust News through the filter of our antitrust expertise.
On November 16, 2017 in Washington, DC, Deputy Assistant Attorney General Donald G. Kempf, Jr. made news about antitrust merger review at the American Bar Association’s Antitrust Fall Forum.
Kempf said—simply—that the DOJ will try to shorten the time it takes it to review mergers for antitrust and competition issues. In 2011, the average merger took just over 7 months to review. In 2016, the review time increased to 11.6 months on average.
That is unacceptable. Companies that want to merge should not have to wait almost full year to do so. A lot can happen in a year, particularly now where technology and low entry barriers mean that entire markets often change in a short period of time.
How did the excess delays happen?
To explain, let’s back up and explain—briefly—how an antitrust merger review works:
The merging parties begin by completing what is called a Hart-Scott-Rodino (HSR) filing. Either the DOJ or FTC has 30 days to decide whether to issue what is called a second request. If one of the antitrust agencies thinks that there could be genuine competition issues for the merger, they may issue this second request, which opens up a heavy set of fact-finding, including document production.
At some point, the antitrust agencies may either approve the merger, reach an agreement with the parties to approve the merger with certain requirements (like selling assets) or (in the case of the DOJ) to seek a preliminary injunction stopping the merger.
According to Kempf, over time the second request period increased in scope and complexity and the preliminary injunction hearings became mini-trials. Indeed, they often have the same effect as a trial on the merger because if the DOJ wins, the parties often abandon the merger. If the DOJ loses, it often halts the challenge.
Kempf went on to articulate why shortening merger review time is so important. His best line was that “delaying competitive mergers is anticompetitive, and that’s not the business the Antitrust Division wants to be in. Just the opposite.”
He offered five suggestions to shorten antitrust merger reviews:
- The antitrust agencies can clear more transactions that don’t harm competition during the initial HSR waiting period (before any second request). He offered some advice to antitrust lawyers: “To help facilitate this, if you are aware of competitive issues from the get-go, meet with us early and often.”
- When a second request is necessary, he urged antitrust counsel to tell DOJ how they can make the investigation more efficient: “The Division is looking for relevant documents, not a needle in a haystack.”
- Antitrust attorneys should work with DOJ to tailor document requests to limit the universe of responsive documents to those most likely to be relevant to the important competition questions.
- The parties should provide relevant information early in the investigation, including making business people available for interviews without delay.
- DOJ will try to reduce the number of custodians whose documents they request.
As antitrust attorneys, we will heed this advice and pay attention to whether, in practice, DOJ does the same.
Interestingly, Kempf also referenced an earlier speech by DOJ antitrust head Makan Delrahim in which Delrahim explained that DOJ is currently much less interested in behavioral remedies for antitrust issues in mergers. They will instead focus on structural remedies in negotiating with the parties. In a prior article, I similarly argued that conduct or behavioral remedies are a bad idea in solving anticompetitive merger issues.
In further antitrust merger news, antitrust merger expert Steven Levitsky joined Bona Law in October 2017 in our New York Office.
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