December 1, 2014

Foreign Antitrust Defendants Feel Some Relief from the Reach of the Sherman Act in Civil Matters

The Seventh Circuit Court of Appeals ruled that Motorola cannot recover overcharges to its non-U.S. subsidiaries that purchased price-fixed LCD panels abroad, even though finished cellphones incorporating those panels were ultimately sold in the United States. The Court held that permitting such actions would be an unjustified interference with the right of foreign nations to regulate their own economies.

Categories: US Antitrust Basics, US Cartels


November 6, 2014

Sample Antitrust-Related Provisions in M&A Agreements--2014 Edition

This note provides a much expanded sample of antitrust-related provisons in M&A agreements over the one we posted in April 2013. As before, the sample provisions have been taken (sometimes with a little modification) from actual M&A agreements. 

This sample will give you with a good idea of the wide variety of provisions parties have used in dealing with 

  • the jurisdictions and the timing where merger control filings are to be made;
  • the level of cooperation the parties owe each other in defending the transaction;
  • who controls the defense strategy
  • the antitrust-related conditions precedent
  • whether the parties are obligated to litigate an adverse agency decision and, if so, who controls the litigation strategy and how long will the parties have to litigate before the drop-dead date;
  • whether the buyer is obligated to "fix" any antitrust concerns through consent decree relief and how far this obligations goes;
  • whether an antitrust reverse termination fee is to be paid in the event of a failure of the antitrust conditions; and
  • the conditions under which the agreement may be terminated or the drop-dead date extended

Of course, every deal stands on its own. The language that has been used in one deal may not be appropriate for another deal, and inclusion of a provision in this sample does not constitute an endorsement of the language. Still, I find the collection helpful in drafting and negotiating the antitrust provisions in M&A agreements.

Dale Collins

Categories: EU Mergers, US Mergers


May 14, 2014

Antitrust Reverse Termination Fees--2014 Update

This post updates one we did over a year ago analyzing antitrust reverse breakup fees in public deals since January 1, 2005.

An antitrust reverse termination fee (ARTF), sometimes called an antitrust reverse breakup fee, is a fee payable by the buyer to the seller if and only if the deal cannot close because the necessary antitrust approvals or clearances have not been obtained. The idea behind an antitrust reverse termination fee is twofold: (1) it provides a financial incentive to the buyer to propose curative divestitures or other solutions to satisfy the competitive concerns of the antitrust reviewing authorities and so permit the deal to close, and (2) it provides the seller with some compensation in the event the deal does not close for antitrust reasons.

Our sample now covers 760 strategic negotiated transactions announced between January 1, 2005, and May 1, 2014. Of these, 79 transactions, or about 9.8% of the total, had antitrust reverse termination fees. The fees were very idiosyncratic and showed no statistically significant relationship to the transaction value of the deal or trend over time, with fees ranging from a low of 0.1% to a high of 39.8%. The average antitrust reverse termination fee for the sample was 5.8% of the transaction value, although several high percentage fees skewed the distribution to the high end. A better indicator may be the median, which was 4.3% of the transaction value.

Significantly, of the 72 completed transactions with an antitrust reverse termination fee, 50 were cleared without any antitrust challenge. One transaction (AT&T/T-Mobile) was terminated in the course of litigation with the Antitrust Division, 19 were subject to only a DOJ or FTC consent order, one (Boston Scientific/Guidant) was subject to both an FTC consent order and EC undertakings, and one (Federated/May) was subject to an assurance agreement with a group of state attorneys general.

Dale Collins

  Antitrust Reverse Termination Fees--Data Set (January 1, 2005 through May 1, 2014)

Categories: EU Mergers, US Mergers