- US and EU Antitrust Authorities Issue Best Practices Statement for Coordination of Procedural Issues in Merger Reviews
- July 31, 2003
- Law Firm: Perkins Coie LLP - Seattle Office
On October 30, 2002, the antitrust authorities of the United States and the European Union jointly issued a statement of Best Practices for coordination of procedural issues in merger reviews. The Federal Trade Commission, the Department of Justice and the European Commission intend to better coordinate the procedures for respective antitrust reviews of mergers and acquisitions that are subject to both jurisdictions. The goal of these agencies is that the Best Practices statement will reduce the likelihood of conflicting or inconsistent outcomes and will coordinate the timing of their respective investigations.
It is significant that accomplishment of the Best Practices objectives will be, to a substantial degree, dependent upon the cooperation of the merging parties
- to confer on timetables with EU and US staffs jointly before filing notifications;
- to agree to parallel timetables for filings and reviews of transactions;
- to waive confidentiality to permit the sharing of documents and information produced by the parties; and
- to permit joint EU/US interviews and discovery.
The Best Practices statement explicitly announces that "any party's choice not to abide by some or all of the agencies' recommendations [on timing and confidentiality waivers] will not in any way prejudice the conduct or outcome of the agencies' investigations."
It should be noted that the agencies currently engage in a fair amount of coordination and consultation, but the Best Practices statement commits them to do so with greater frequency and to a greater degree. Specifically, the statement announces that the agencies will strive for
- closer consultation on market definition, competitive effects, theories of harm, efficiencies, economic theories, empirical evidence needed and remedies;
- the designation of contact persons at the respective agencies to establish a schedule for consultation and coordination at the onset of investigations;
- coordination by agency personnel at various levels at specified stages of the investigation;
- the attendance by representatives of one agency at key events of other agencies, such as the EU's Oral Hearing, or a party's presentation to the Assistant Attorney General or FTC Bureau Director; and
- closer and earlier consultation on remedies in an effort to avoid imposing inconsistent obligations on the parties in the respective jurisdictions.
The Best Practices statement is limited to procedural considerations. Although it may help reduce inconsistencies, further efforts toward substantive convergence of the legal standards for reviewing mergers remains open to active debate in the US and EU. Having lost three significant judicial decisions in a matter of months, the EU is exploring a host of other ways to revise its merger regulation, including changing its legal standard, revising the timing for judicial review, and amending provisions that would add to the time the EU has to review mergers. Such changes would require approval of the EU member states.
Greater coordination and consultation between the agencies on legal and economic theory, as well as other doctrinal approaches to merger review, is good news to US companies that may have to go through this process. It is likely that some of the more troublesome theories the EU has followed recently (portfolio effects, conglomerate leverage) will not be fully supported by US antitrust agencies and their pursuit may be deterred. On the other hand, pressure may build on US companies to waive confidentiality in order to share information and to agree to make presentations to a joint audience of EU and US representatives. Although the statement disclaims that any adverse consequence or prejudice will result from a party's choice not to waive confidentiality or support recommendations for sharing information, only time will determine the practical effects of doing so. If the statement is read literally, a party's decision not to cooperate may be viewed as thwarting the stated objectives. The full text of the Best Practices statement may be found at http://www.ftc.gov/opa/2002/10/mergerbestpractices.htm.