Published: May 2017Contents
i) What are the hot topics?
Merger enforcement continues to be a major focus of United States competition authorities. The agencies are preparing for trials in two major health insurance mergers in November, and recently won an appeals court decision directing that a lower court enjoin a hospital merger. Earlier in the year the US Federal Trade Commission prevailed in blocking the merger of Staples and Office Depot.
ii)Tell us about any key legal developments – recent or pending – and their international impact.
In September, the United States Court of Appeals overturned the US Department of Justice’s (DOJ) win in United States v. American Express Co, a case in which certain of American Express’s merchant acceptance rules were challenged as restraints of trade. Significantly, this decision explicitly recognised, among other things, the importance of analysing both sides of two-sided markets when such markets come under antitrust challenge.
Additionally, both the Antitrust Division of the DOJ and the White House Council of Economic Advisers have recently shown interest in the issue of the possible competitive effects of investors’ common ownership of stock in multiple competitors. Indeed, the DOJ is currently reported to be investigating the pricing behaviour of airlines – an industry in which, according to recent academic papers, common institutional stock ownership could tend to lead to common pricing decisions.
iii) What are the biggest opportunities and challenges for practitioners and clients?
In light of the agencies’ continued vigorous merger enforcement, practitioners and clients must be acutely aware that their deals will face close scrutiny. Parties should appreciate the challenges a deal may face from the beginning of deal negotiation, as the agencies’ approach will affect the parties’ analysis of the likelihood that the deal will be allowed to close, as well as the likelihood that any remedies the parties may propose will be accepted. These considerations will, in turn, influence the negotiation of provisions in the merger agreement, including break-up fees and provisions governing potential divestitures.
Cleary Gottlieb Steen & Hamilton LLP Brussels