Message from the Editors
Successfully navigating antitrust agency investigations requires a familiarity with Department of Justice and Federal Trade Commission processes, as well as insight into those agencies and their leadership's current priorities for enforcement and competition policy. This newsletter provides periodic updates on both, offering an analytical look at how the antitrust agencies are approaching important competition issues and what current investigations may mean for potential future enforcement. We hope our experience—both inside and outside these agencies—provides insights that help you make more informed decisions for your business.
FTC Releases MTA for Its Merger Review Process
On August 7, the Federal Trade Commission released a Model Timing Agreement (MTA) for use in the FTC's merger review process. In many cases, merging parties and the reviewing agency, either the FTC or the Antitrust Division of the Department of Justice (DOJ), will enter into a timing agreement to establish certain obligations for each side regarding the agency's review of the transaction, including data and document production deadlines, review milestones, and notification requirements. In theory, timing agreements can provide the parties with additional certainty about the scope of their Second Request obligations, and set milestones for certain agency actions, while simultaneously giving the reviewing agency more time to conduct the review than is required by statute and a more tailored and timely production of documents and data. On the other hand, the Model Timing Agreement puts limited obligations on the FTC and notwithstanding entering into the agreement, parties often find themselves being asked to provide the government with additional time to review a transaction.
The FTC's MTA articulates a baseline for FTC timing agreements going forward. However, each transaction is different, and the actual timing agreement may vary because either the FTC or the parties sought different terms.
There are a number of provisions in the MTA worth particular consideration by parties as they determine whether they should enter into a timing agreement.
- FTC's Review Period. The MTA contemplates that the FTC be given 60-90 days after the parties substantially comply with the Second Request before the parties may close the transaction—up from 30 days under the statute. The 60-90 day range is within current norms for the FTC's review and seems to reflect the agency view that increasingly data- and document-heavy Second Requests require additional time to review.
- 30-Day Notification Requirement. The FTC has routinely required that parties agree to provide "pre-notification" before both certifying substantial compliance and before closing. In the past the FTC often accepted 10 days' notice for both periods, but under the MTA the FTC now requires 30 days' notice.
- Custodians. The MTA continues the FTC approach of setting a final custodian list within five days of execution of the timing agreement. The FTC will also continue to identify "priority custodians," which are those custodians for whom the FTC requires substantially complete productions at least 30 days before substantial compliance with the Second Request.
- IH Timing. The model investigational hearing (IH) terms include a requirement that the FTC conduct all IH proceedings within 15 business days of substantial compliance. In return, parties are obligated to make witnesses available ten days after production of the witnesses' documents or after the FTC identifies them as witnesses, and must make a substantially complete production of that witness' documents if the witness is identified prior to the party's substantial compliance. Moreover, the FTC has reserved the right to re-open any IH if the FTC receives responsive, non-duplicative, non-privileged information from the witness' files or from the party's relevant non-custodial productions after the IH is completed.
- Mandatory TRO Stipulation and Prohibition on Declaratory Judgment Actions. The MTA requires parties to stipulate to a temporary restraining order and agree that they will not seek a declaratory judgment on the merits of the transaction. This provision brings the FTC in line with DOJ practice.
- Meetings with Staff. Prior timing agreements committed the FTC to conduct a "state of play" meeting within a certain period after substantial compliance to provide the parties with insight into staff views regarding the proposed merger. The MTA does not require such meetings or establish any particular time frame, though parties can expect that meetings with the staff and Bureau of Competition leadership will occur during the course of any contested investigation.
While deviations may be appropriate depending on the circumstances associated with each case, it is important to be familiar with the requirements of the FTC MTA because the FTC has stated its expectation that future timing agreements will substantially conform to the MTA. Before entering into any timing agreement, however, parties should, as always, carefully evaluate whether doing so would be in the best interest of the parties. Key considerations include:
- Is extending the government's time for review consistent with the merger agreement and timing considerations for the deal?
- Is it more likely that the transaction will be cleared or an acceptable remedy will be negotiated if the government is not limited to the statutory 30-day clock?
- Is it in the parties' best interest to provide the government additional time that might be used to build its case or instead to push the review as quickly as possible?
- If the parties do not give the government additional time, will the government be reasonable in negotiating the scope of the Second Request response and in having substantive discussions?
- Are the parties concerned about having adequate time built in for discussions with the front office (at DOJ) or commissioners (at the FTC) and will the timing agreement adequately address this concern?
Additional Agency Updates
- Termination of "Legacy"
Antitrust Judgments and Review of Paramount Decrees. The
Antitrust Division filed to terminate 19 "legacy"
judgments in the United States District Court for the District of
Columbia on July 9. These judgments were entered between 1927 and
1981 and were not time-limited. Following a review and public
comment period, the Division identified the 19 judgments suitable
for termination because of (i) age; (ii) satisfaction of judgment
terms; (iii) non-existence of some or all of the defendants; (iv)
changed market conditions; and/or (v) expiration of the relevant
patents. On August
2, DOJ announced it would review seven additional judgments,
commonly referred to as the Paramount Decrees, governing conduct by
movie theatres. DOJ's review of the Paramount Decrees was open
to public comment through September 4.
Read the DOJ press release on seeking termination of "legacy" judgments (7/9/18) »»
Read the DOJ release on opening of paramount consent decrees (8/2/19) »»
- Tronox-Cristal Complaint Filed
after Conclusion of Part 3 Trial. On July 10, the FTC filed a
complaint in the United States District Court for the District of
Columbia seeking a temporary restraining order and preliminary
injunction (PI) against the proposed acquisition of the titanium
dioxide business of Cristal by Tronox Limited. Titanium dioxide
is a white pigment used in coatings, plastics, paper, food,
cosmetics, and other consumer goods. The FTC's complaint
followed the conclusion of a Part 3 trial on the merits of the
transaction before an administrative law judge. A PI hearing was
held before Judge McFadden on August 7–9. Judge McFadden
granted the PI on September 7.
See the FTC's Tronox case proceedings »»
- FTC Commissioners Testified
before the House Energy and Commerce Subcommittee on Digital
Commerce and Consumer Protection. The five FTC commissioners
testified on July 18 before a House subcommittee. The testimony
described the FTC's accomplishments during FY2017 and
priorities for the upcoming year for both the FTC's competition
and consumer protection missions. The competition priorities include
rigorous merger review and challenges to alleged anticompetitive
conduct by pharmaceutical manufacturers. The commissioners also
highlighted ongoing efforts to monitor activity in the high-tech
sector and take appropriate steps to preserve competition.
Access the commissioners' testimony »»
- District Court Granted
Preliminary Injunction in Wilhelmsen Maritime Services-Drew Marine
Group. Judge Tanya
Chutkan (DDC) granted a preliminary injunction on July 23 against
the proposed acquisition of Drew Marine Group by Wilhelmsen
Maritime Services. The parties both supply water-treatment
chemicals and services to shipping fleets worldwide. As a result of
the ruling, the parties announced that they would abandon the
See the FTC's Wilhelmsen case proceedings »»
- Speech by DAAG Roger Alford at
the 2018 Competition Policy Forum. On July 31, at the 2018
Competition Policy Forum in Beijing, Deputy Assistant Attorney
General Roger Alford delivered a speech honoring the tenth
anniversary of China's Anti-Monopoly Law and the restructuring
of China's antitrust enforcers. DAAG Alford offered suggestions to the State
Administration for Market Regulation on ways in which it could
transition to a "mature antitrust enforcement regime . . . far
faster than our own experience."
Read the remarks »»
- FTC Clears Grifols-Biotest US
with Conditions. The FTC announced on August 1 that it would
approve the proposed acquisition of Biotest US, a blood
plasma-testing company, by healthcare company Grifols with
conditions. To address the FTC's concerns about potential
anticompetitive effects of the transaction, the parties must (i)
divest blood plasma collection centers in Augusta, Georgia; Lincoln, Nebraska; and
Youngstown, Ohio and (ii) not acquire an interest in ADMA
Biologics, owned by Biotest's parent and manufacturer of a
hepatitis B immune globulin (HBIG) that competes with Grifols'
(HBIG). KedPlasma is the proposed purchaser of the divestiture
Read the FTC press release »»
- Retirement of DAAG Don Kempf. Deputy Assistant Attorney General Don Kempf retired from the Antitrust Division in mid-August. DAAG Kempf joined the Division in June 2017 and had been heavily involved in the Division's merger litigation. DAAG Kempf is the second DAAG to leave the Antitrust Division this summer, following DAAG Luke Froeb, who returned to Vanderbilt University at the end of June.
- Speech by AAG Makan Delrahim at
Notre Dame Law School. On August 31, Assistant Attorney
General Makan Delrahim delivered a speech at Notre Dame Law School
discussing competition policy and collegiate and professional
sports. AAG Delrahim offered lessons drawn from past antitrust
challenges to conduct within collegiate and professional sports. He
concluded by describing the Antitrust Division's current
enforcement actions involving sports industries, including sports
Read the speech »»
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.