To prevent antitrust skeletons from haunting you after an acquisition, it is advisable to not only perform a due diligence, but also to keep an eye on the duration of the liability provisions in the purchase agreement. In a recent case, a court stayed proceedings to prevent a seller's liability from lapsing before ACM had issued a report on a possible cartel infringement by the target company prior to it being purchased.
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ACM approved telecom provider Vodafone's acquisition of mobile phone retail chain BelCompany from MacintoshRetail Group ("MRG"), under the condition that BelCompany's management remain at arm's length from Vodafone until 1 January 2012, at the latest. As of that date, Vodafone would no longer sell any mobile phone plans of competitors KPN and T-Mobile in the BelCompany stores or in its own stores.
Just five months after ACM's conditional clearance, ACM carried out a dawn raid at a number of mobile operators in search of possible cartel infringements. After being notified by Vodafone of ACM's investigation, MRG stated that it would not accept liability for any cartel infringement by BelCompany that took place prior to the acquisition nor would it be willing to renegotiate the purchase agreement's clause in which liability would lapse if no legal proceedings were initiated within six months following notification of a claim. As the six-month period started ticking, and without Vodafone being able to perform its own investigation into BelCompany's potential cartel behaviour because of ACM's clearance condition, Vodafone issued a summons with the request to stay the proceedings until ACM had concluded its investigation and issued a decision on BelCompany's possible cartel infringements preceding the acquisition date. The District Court of Amsterdam ruled that Vodafone had a legitimate interest to stay proceedings, but only up to four weeks after ACM's final investigation report. According to the Court, this would provide Vodafone with ample opportunity to substantiate its claim, if necessary. The parties could subsequently decide on whether to continue the proceedings.
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