Even if the FTC is not successful, the costs of litigating a merger is not small and can easily eat away all the expected synergies of a mid-sized deal. on the website and they are astounding.) Under the HSR Act, companies are required to notify the FTC and the Antitrust Division of the Department of Justice (DOJ) of transactions meeting certain thresholds. Michigan Supreme Court Modifies Requirements for Blanket Purchase Navigating the Pricing Regulation for Pharmaceuticals and Medical Supreme Court Limits the Lanham Acts Extraterritorial Reach. Federal government websites often end in .gov or .mil. The Federal Trade Commission works to promote competition and protect and educate consumers. Given this, for deals on the cusp, it may be prudent for parties to make the absence of a warning letter a condition precedent to closing. Our mission is protecting consumers and competition by preventing anticompetitive, deceptive, and unfair business practices through law enforcement, advocacy, and education without unduly burdening legitimate business activity. If it turns out the FTC was not bluffing, who should bear the consequences? The site is secure. We enforce federal competition and consumer protection laws that prevent anticompetitive, deceptive, and unfair business practices. His practice includes the full range of antitrust matters and disputes: from class actions to competitor You are responsible for reading, understanding and agreeing to the National Law Review's (NLRs) and the National Law Forum LLC's Terms of Use and Privacy Policy before using the National Law Review website. K&L Gates is aware of Warning Letters being issued in transactions in which the parties had received no prior investigative communications from the FTC and in which the parties are unaware of. Based on the "Time of Suit" doctrine derived from United States v. E.I. Reproduction of FTCs Sample Pre-Consummation Warning Letter17, Jane Doe Federal government websites often end in .gov or .mil. The .gov means its official. In 1976, Congress established a merger control regime that has become the envy of the world. When the staff was not ready to allow the waiting period to expire but a full-blown Second Request investigation might not be necessary, parties were given the opportunity to withdraw and refile their HSR notification, opening a second 30-day waiting period. Additionally, Section 7 of the Clayton Act provides individual state attorneys generals and private plaintiffs with the ability to challenge consummated transactions. Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely. Last month, however, new FTC leadership upended this carefully calibrated balance. (02/02/23), : The PNO has created a new Accellion form that will allow filers to submit HSR filings without requesting an Accellion link. The current minimum size-of-transaction threshold is $92 million. The Federal Trade Commission chair suffered a setback in her ambitions to beef up antitrust enforcement for the Big Tech era when a California judge rejected . No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. "15 In the past, the FTC has generally referred to "honest businesses" within the context of protecting consumers against fraud and the like, which raises the possibility that here, Pre-Consummation Warning Letters may be issued to investigate a broader range of conduct than one would expect in a traditional merger investigation.16 Is "honest business" a reference to small- and medium-sized business in the manner of European competition? 20-3590 (JEB), 2021 U.S. Dist. Seeking to transform the historically sleepy agency into a more progressive regulator of the U.S. economy, Kahns FTCs latest salvo targets the merger review process. Please see the Bureaus new blog post addressing the issue of early termination of the waiting period. 1923077 (Sept. 19, 2019), https://www.ftc.gov/system/files/documents/public_statements/1544655/commisisoner_rohit_chopra_statement_on_truly_organic_sept_19_2019.pdf ("[A]ddressing unlawful conduct that is dishonest or fraudulent. As a BUYER, can you refrain from closing (if desired) because an investigation is still open? Track your investments 24 hours a day, around the clock from around the world. The form of the letter is posted in its entirety below. 5See Organisation for Economic Co-operation and Development, Investigations of Consummated and Non-Notifiable Mergers, Submission of the United States to the OECD Working Party No. They will be put in a position of either closing their deal under the shadow of a post-closing investigation6or delaying closing their deal, without the discipline on the FTC of a defined time limit for its investigation (since the initial waiting period has expired). The FTC recently sent a warning letter to North Carolina lawmakers considering a bill to exempt the University of North Carolina from antitrust laws. Follow Bloomberg reporters as they uncover some of the biggest financial crimes of the modern era. We work to advance government policies that protect consumers and promote competition. Before sharing sensitive information, make sure youre on a federal government site. Find the resources you need to understand how consumer protection law impacts your business. New filing rules seek data on prior mergers, labor impacts, New requirements could add 2-3 months to deal-review timetable. You can find them here: The effective date for these changes is Feb. 27. As the saying goes, the only thing for certain, is nothing is certain. With a rash of changes since Chairperson Lina Kahn took command, the FTC is certainly proving that maxim true. So far, most merging parties appear to be ignoring them. An experienced antitrust and commercial litigation lawyer, Colin has litigated cases before federal and state courts throughout the United States and before administrative agencies. We believe it is important to be upfront about these capacity constraints. The FTC also has a fairly good track record in the merger cases it does bring, especially since any challenge will be heard in the first instance by an Administrative Law Judge employed by the FTC and whose decisions will be reviewed de novo by the same Commissioners who voted to bring the case. If the deal is approved, they can proceed to closing comforted in the belief that the federal government will not later come knocking. The Washington Post first reported the news, citing access to a 20-page letter to OpenAI asking for information on complaints about disparagement. If the day the federal holiday is observed is the actual holiday, the agency is closed and waiting periods roll to the next business day. The FTC predicts that it may receive as many as 3,500 HSR notifications in 2021 this is up from nearly 2,000 in 2020, which was double the number seen in 2010. merger data. For deals that we cannot fully investigate within the requisite timelines, we have begun to send standard form letters alerting companies that the FTCs investigation remains open and reminding companies that the agency may subsequently determine that the deal was unlawful. Read more: https://bit.ly/43rpVUQ 14 Jul 2023 20:54:08 In addition, the new HSR Form and Instructions are now in effect. Search the Legal Library instead. Explore refund statistics including where refunds were sent and the dollar amounts refunded with this visualization. ( The current minimum size-of-transaction threshold is $92 million.) The FTC and DOJ can challenge transactions after consummation where "the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly." Triage is a tried-and-true strategy on the battlefield. Rather than reserve post-closing challenges for the rare deal that slipped by the FTCs watchful glare, the agency has now adopted a new practice of issuing warning letters regarding deals it hasallowed to close. But if the FTC means to deter the immediate closing of these deals what else could it mean when the FTC says Please be advised that if the parties consummate this transaction before the Commission has completed its investigation, they would do so at their own risk it will have to make good on its promise to take action. Search the Legal Library instead. In the meantime, merging parties should consider early in transaction planning how they would respond to a warning letter, whether that expected response should be reflected in the deal agreement, and whether the possibility of a warning letter changes the calculus for early engagement with FTC staff. Today, the U.S. Food and Drug Administration and the Federal Trade Commission issued warning letters to six companies for illegally selling copycat food products containing Delta-8 . Keep an eye out for our blog post with tips on applying the new thresholds and fees. Thank you for your interest in WilmerHale. The National Law Review is a free to use, no-log in database of legal and business articles. Looking for legal documents or records? 45. Entitled or Disabled? The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely. Learn more about your rights as a consumer and how to spot and avoid scams. But if the FTC is serious about its warning letters, it will need to bring a post-closing case just to prove it can and will. 4Sample Pre-Consummation Warning Letter, Federal Trade Commission (Aug. 3, 2021), https://www.ftc.gov/system Workers and Honest Businesses. L3Harris - Aerojet Merger L3Harris, the sixth-largest U.S.-based defense contractor,26 announced in December 2022 that it would acquire Aerojet,27 the last remaining independent U.S. supplier of missile propulsion systems.28 This action by L3Harris, which itself is the product of decades of mergers,29 is a continuation of the company's pursuit to buy its way to the top of the defense . Of course, even then nothing is absolutely certain. #FDA and #FTC sent warning letters to 6 companies who are selling products with Delta-8 #THC that resemble familiar candy, chips, and beverages online. August 16, 2021 Client Alert Contributors Leon B. Greenfield Hartmut Schneider Perry A. Lange Renita Khanduja Lauren Ige In an August 3 blog post, the Federal Trade Commission (FTC) announced a change to the FTC's merger review process with potentially far-reaching effects. The Federal Trade Commission, citing capacity constraints, has begun sending warning letters to deal parties when it does not complete merger investigations within the waiting period established under the Hart-Scott-Rodino Act. . Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices atReportFraud.ftc.gov. Accordingly, even if the parties consummate the above-referenced transaction, the Commission may still take further action as the public interest may require, which may include any and all available legal actions and seeking any and all appropriate remedies. When the FTC does not challenge a transaction prior to its consummation, this does not constitute an approval or clearance of the deal, and the agency maintains the right to challenge a deal regardless of whether it was initially investigated. The FTC administers the premerger notification program, and the staff of the Premerger Notification Office is available to answer questions about how and when to file. DOJ Challenges $4B Merger Months After HSR Filing and Expiration. Companies have announced about $2.8 trillion of deals so far in 2021, an unprecedented number that puts this year on track to be the most active ever, according to data compiled by Bloomberg. The Federal Trade Commission authorized an administrative complaint against the proposed merger between Microsoft Corp. and Activision Blizzard, Inc., a video game developer that creates and publishes games such as Call of Duty, World of Warcraft, Diablo, and Overwatch.Microsoft sells the Xbox gaming console and also offers a video game subscription service called Xbox Game Pass, as well as a . 02:28 - Source: CNN. Currently, transactions over $92 million are potentially reportable, assuming no exemptions apply. Our thinking On Tuesday, August 3, 2021, the Federal Trade Commission announced a new approach for merger investigations that the FTC does not complete during the Hart-Scott-Rodino Act (HSR) waiting periodthe FTC may advise merging parties via a Warning Letter that its investigation remains open despite the expiration of the HSR waiting period. [] The Commission believes that additional resources are necessary to help it effectively achieve its mission.). The content and links on www.NatLawReview.comare intended for general information purposes only. We enforce federal competition and consumer protection laws that prevent anticompetitive, deceptive, and unfair business practices. AI Can Write, But Is It Any Good at Picking Stocks? The FTC reviews mergers per the Hart-Scott-Rodino (HSR) Act, which requires that companies provide the FTC and Department of Justice with advance notice of certain transactions above a certain threshold. Although the antitrust agencies have always been free to reinvestigate reportable transactions where they took no action during the initial waiting period, such investigations have been extraordinarily rare.5As a result, parties to notified transactions that did not receive a Second Request could rest assured thatbarring extraordinary circumstancesthey could close their transaction free from a significant threat of a post-closing investigation or challenge. IT Services for Law Firms: Benefits of Managed IT. A blog post with tips on applying the new thresholds and fees will be posted soon. (02/02/23), Important Notice: The 2023 HSR thresholds have been issued by the Commission and will become effective 30 days after publication in the Federal Register. Until then, parties should at least consider that their deal may be the one the FTC makes its warning-letter poster child, and plan accordingly. New Bitcoin ETFs Now? The latest news impacting markets, business and finance around the world. ET. We enforce federal competition and consumer protection laws that prevent anticompetitive, deceptive, and unfair business practices. John Ingrassia is a special counsel and advises clients on a wide range of antitrust matters in various industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services, health care, and others. Overwhelmingly, companies that receive FTC warning letters take steps quickly to correctproblematic advertising or marketing languageand come into compliance with the law. If you're tempted, slow down, hang up, and log into your student loan account to review your options. du Pont de Nemours & Co., 353 U.S. 586 (1957), consummated mergers may be challenged at "any time when the acquisition threatens to ripen into a prohibited effect. Contract Terms That Impede Competition Investigations, Generative AI Raises Competition Concerns, FTC and Federal and State Partners to Announce Nationwide Robocall and Telemarketing Enforcement Sweep in Chicago on July 18, Prehearing Scheduling Conference In the Matter of Amgen Inc. & Horizon Therapeutics PLC - July 19, 2023, Children's Online Privacy Protection Act (COPPA), BCs Criminal Liaison Unit is Off to the Races, HSR threshold adjustments and reportability for 2023. Parties to transactions above certain thresholds must provide advance notice to the Federal Trade Commission and the Department of Justice, and cannot consummate the deal until expiration of the statutory waiting period. European Commission, Press Release, Mergers: Commission opens in-depth investigation into proposed acquisition of GRAIL by Illumina (July 22, 2021); see also In re Illumina, Inc. and Grail Inc., FTC Docket No. They can be found here. While the delay imposes a burden on the merging parties, the parties receive something in return too. This year, the FTC has been hit by a tidal wave of merger filings that is straining the agencys capacity to rigorously investigate deals ahead of the statutory deadlines. du Pont de Nemours & Co., 353 U.S. 586 at 597 (1957). Looking for legal documents or records? If the FTC or DOJ seeks additional information through whats known as a second request, the deal is then put on hold until the companies have fully complied with the additional investigatory request. The new guidance has already led to an EC review of Illuminas proposed acquisition of Grail, even though the transaction did not meet the EC Merger Regulations revenue thresholds and was not reportable in several Member States that sought a referral to the EC.8Here again, a policy change has created additional uncertainty because merging parties can no longer rely on the fact that an unreportable transaction will not ultimately be reviewed by the EC. 17Sample Pre-Consummation Warning Letter, Federal Trade Commission (Aug. 3, 2021), https://www.ftc.gov/system The policy actually impacts relatively few deals, though it may be difficult for parties negotiating potential deals to guess whether theirs will fall within its ambit. Consider the possibility of receiving an unexpected, eleventh-hour warning letter or Second Request in deciding whether to affirmatively reach out to FTC staff to engage before the expiration of the initial waiting period. For large deals with obvious problems, the FTC is continuing its standard practice of issuing second requests, precluding the immediate expiration of the statutory waiting period. Memo from Chair Lina M. Khan to commission staff and commissioners regarding the vision and priorities for the FTC. Time will tell. It is not, and does not attempt to be, comprehensive in nature. (10/31/22), John Newman & Amy Ritchie, Bureau of Competition, Staff in the Bureau of Competition & Office of Technology, Competition and Consumer Protection Guidance Documents, Statute, Rules and Formal Interpretations, Procedures For Submitting Post-Consummation Filings, The Federal Register has published the Proposed Rulemaking on HSR Form Changes. The Commission, with the concurrence of DOJ, has published details on, Contract Terms That Impede Competition Investigations, Generative AI Raises Competition Concerns, FTC and Federal and State Partners to Announce Nationwide Robocall and Telemarketing Enforcement Sweep in Chicago on July 18, Prehearing Scheduling Conference In the Matter of Amgen Inc. & Horizon Therapeutics PLC - July 19, 2023, HSR Early Termination Notices API Endpoint, Premerger Notification; Reporting and Waiting Period Requirements, 2012 Product Code to 2017 NAPCS-Based Collection Code, blog post regarding a change in the policy regarding the treatment of debt as consideration, HSR Early Termination After a Second Request Issues, Advanced Notice of Proposed HSR Rulemaking. The FTC staffs new policy represents a potentially significant change in the merger review process.

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