Key Takeaways
- The Antitrust Merger Hot Documents Collection, curated by Dechert's antitrust group, highlights real-world documents that have caused deals unwanted attention from government authorities. View the full collection here.
- Recent enforcement actions underscore the influence that contemporaneous deal documents can have on merger reviews.
- The FTC and DOJ rely on "hot" deal documents to determine whether to pursue challenges and build their cases. Courts also grant close attention to these documents when assessing potential harm to competition.
- A well-prepared record of clearly procompetitive narratives can mitigate enforcement risks.
"Hot" deal documents are often the first—and most influential—lens through which competition enforcers assess competitive risk posed by a merger. The Department of Justice (DOJ) and Federal Trade Commission (FTC) scour these documents for indications the transaction may eliminate a key competitor, facilitate price increases, or entrench market power. What they find can set the narrative from day one, trigger a Second Request, and shape whether the competition enforcers demand remedies or sue to block the deal. Building a contemporaneous record of credible, fact-based procompetitive themes can reduce the chance that cherry‑picked or equivocal quotes derail the merger review process.
The new Hart-Scott-Rodino (HSR) filing rules, implemented in February, highlight the FTC's and DOJ's emphasis on scrutinizing parties' internal deal documents early in the merger review process. As Dechert previously reported, these revised rules broaden the scope of required document submissions to include materials shared with the "supervisory deal team lead" or any individual board member, rather than limiting production to documents shared with the full board as under the previous rules. This change reflects the agencies' belief that internal documents often reveal the underlying intent of a transaction and expected competitive effects. The upshot: more documents will land on the competition enforcers' desk at the outset, potentially shaping the outcome of the initial merger review and influencing the outcome of merger investigations.
Recent enforcement actions underscore the influence that contemporaneous deal documents can have on merger reviews. An analysis of public court filings from recent challenges shows that the FTC and DOJ consistently rely on these "hot" deal documents both in deciding whether to pursue a challenge and in building their case in court. Likewise, courts give close attention to these documents when assessing whether a transaction may harm competition.
For example, in the FTC's challenge to Tapestry's acquisition of rival handbag maker Capri, the district court referenced a Tapestry presentation that stated "[we] are each other's top competition when consumers are considering other brands for purchase[.]" The court also highlighted a presentation prepared for Tapestry's CEO outlining the strategic benefits of the deal. The presentation noted that Capri offered deeper discounts than Tapestry, which Tapestry viewed as "an opportunity to reduce [Capri's] discount." Based on this evidence, the court concluded that Tapestry perceived the transaction as a chance to raise prices, remarking that "Tapestry's internal documents are telling."
Similarly, in the FTC's recent challenge to Sealy's acquisition of Mattress Firm—a vertical transaction—the FTC's complaint cited a presentation to the buyer's board of directors that the acquisition would let the buyer "further build[] a competitive moat." To substantiate its vertical theory of harm, the FTC needed to demonstrate that Sealy had the incentive to reduce the floor space allocated to competitors at Mattress Firm (i.e., foreclosure). At trial, the FTC introduced Sealy documents, shared with its CEO, that modeled revenue synergies achievable through foreclosure. Relying on these documents, the district court concluded that the FTC established "that the combined firm will have a profit-aligned incentive to increase the sales of Tempur Sealy mattresses after acquisition by excluding rivals from the Mattress Firm floor."
In its recent complaint challenging Amex GBT's proposed acquisition of rival business travel management company, Carlson Wagonlit Travel (CWT), the DOJ leaned on the parties' own words. It cited a seller presentation predicting the deal would increase Amex GBT's revenues by easing "price pressure" through the "removal of a big competitor" and alleged the seller expected that prospect to command a higher purchase price. Enforcers treat such contemporaneous documents as powerful, highly probative evidence bearing directly on competitive effects and feature them prominently at trial—even if other data or evidence may contradict such documents.
Competition enforcers also mine for speculative, non-privileged statements made about antitrust risk in documents. For example, in the DOJ's complaint to block a transaction between book publishers, the DOJ cited the seller-CEO's email around the time the seller went up for sale, but before the deal was announced, where he opined that he was "pretty sure that the Department of Justice wouldn't allow [the buyer] to buy us...[.]" In its complaint to block UnitedHealth's acquisition of Amedisys, the DOJ pointed to an email from seller's CEO to other C-Suite executives about antitrust risks and likely divestitures, noting such documents "were clearly relevant to the potential impact of this merger on competition." Agencies use such comments about antitrust risks to show the parties anticipated competitive problems and to undercut ex post explanations.
On the other hand, absent compelling internal deal documents, particularly in cases involving more nuanced theories of harm, courts may be less inclined to rule in favor of the government. In the FTC's challenge to the Evonik/PeroxyChem merger, where Dechert represented the seller PeroxyChem, the court put it bluntly: "Lacking a smoking gun, the FTC fires away with a few squirt guns." In another recent case, the district court sided with Microsoft in the FTC's challenge of Microsoft's acquisition of Activision Blizzard, emphasizing the absence of internal documents that contradicted Microsoft's narrative:
"Despite the completion of extensive discovery in the FTC administrative proceeding, including production of nearly 1 million documents and 30 depositions, the FTC has not identified a single document which contradicts Microsoft's publicly-stated commitment to make Call of Duty available on PlayStation (and Nintendo Switch). [...] The public commitment to keep Call of Duty multiplatform, and the absence of any documents contradicting those words, strongly suggests the combined firm probably will not withhold Call of Duty from PlayStation."
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