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From Antitrust Law Daily, September 11, 2014

FTC Chairwoman advises merging parties not to dictate remedies, to consider “self-reporting”

By Jeffrey May, J.D.

Merging parties should not attempt to dictate remedies when negotiating a settlement with the FTC, FTC Chairwoman Edith Ramirez told attendees of Fordham Law's 41st Annual International Antitrust Law & Policy Conference today in New York City. As the FTC sees an uptick in merger activity—with filings up some 20 percent so far this fiscal year—Ramirez said that she is seeing an increasing trend toward merger parties coming in with very specific remedies in mind and wanting to dictate a certain outcome. This approach could delay rather than expedite a settlement, she warned.

Ramirez cautioned merging parties to be flexible in their approach to a settlement. Parties are encouraged to identify competitive concerns and propose solutions. However, parties to a merger should not force a path with which the agency does not agree. The FTC will conduct its own review and determine the remedies that will restore competition lost by the proposed transaction. The merger review discussions should be an iterative, organic process, according to Ramirez.

Consummated transactions. Ramirez also had advice for parties to non-reportable mergers. Noting the recent spate of agency challenges to consummated mergers, she suggested that parties not required to file a premerger notification consider “self-reporting” a deal if there are issues that raise competition concerns and might result in a later challenge.

The preferred relief in a consummated merger case is structural, Ramirez noted. Pointing to a number of cases in the last decade where the agency successfully obtained divestiture relief in consummated merger cases, she warned that the agency will “go far” to achieve a remedy that will restore lost competition.

Noticeably absent from the remarks was a mention the Commission's recent decision to reject the proposed settlement in an administrative challenge to the consummated combination of Phoebe Putney Health System, Inc.—the operator of Phoebe Putney Memorial Hospital—and rival Palmyra Park Hospital, Inc. in Albany, Georgia. The proposed consent order, announced in August 2013, did not include divestiture relief based on an assumption that Georgia state law would foreclose such a remedy. Last week, the FTC returned the matter to administrative litigation because new information shows structural relief might be available to remedy the apparent anticompetitive effects of the 2011 transaction.

Global deals. Parties to global mergers and acquisitions face the added difficulty of obtaining consistent outcomes as multiple jurisdictions review the deal. Increasingly, transactions are being looked at by multiple jurisdictions, and five to ten parallel investigations are not uncommon.

Ramirez encouraged parties to global deals to provide waivers of confidentiality to allow cooperating agencies to share information. This will facilitate a more consistent outcome, according to Ramirez. Parties also should be thoughtful in the way that they notify transactions to competition agencies to facilitate an effective timetable for review.

In addition, Ramirez sees a need for a new multilateral approach to global mergers. Bilateral exchanges of information do not make sense when multiple agencies are reviewing a deal.

The FTC chairwoman suggested that the European Commission's role as a coordinator in the recent review of Thermo Fisher Scientific Inc.’s $13.6 billion acquisition of Life Technologies Corporation should serve as a model for future international merger cooperation. The review of that transaction—involving agencies from Australia, Canada, China, the European Union, Japan, Korea, and the United States—was held out as a leading example of effective international cooperation. As a result of close cooperation, the FTC and European Commission were able to approve a buyer for the divestiture assets in that transaction on the same day.

As more deals require notifying five to 10 jurisdictions, it behooves jurisdictions to consider new models of cooperation, according to Ramirez.

Companies: Phoebe Putney Health System, Inc.; Thermo Fisher Scientific Inc.

MainStory: TopStory AcquisitionsMergers Antitrust FederalTradeCommissionNews

 

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