USA Law and Practice Contributed by: Bradley Justus, Lisl Dunlop, Josh Jowdy and Sandhya Taneja, Axinn
4.7 Special Consideration for Joint Ventures The Agencies typically review joint ventures (JVs) by analysing their overall competitive effect. JVs may be pro-competitive if they allow participants to provide goods or services that are less expensive, more valu - able to consumers, or brought to market faster than would be possible without the JV. JVs may harm com - petition if they reduce the JV parties’ incentives to compete against one another, if the parties’ independ - ent decision-making is limited outside the JV because of combined control or combined financial interests, or if the JV facilitates collusion. 5. Decision: Prohibitions and Remedies 5.1 Authorities’ Ability to Prohibit or Interfere With Transactions The judicial processes that each Agency may pursue to block a transaction differ. DOJ To obtain an order to either block a proposed transac - tion or unwind a completed transaction, the DOJ must file in federal district court a complaint and motions for a preliminary injunction (if the transaction has not closed) and a permanent injunction. To obtain a preliminary injunction to prevent a trans - action closing pending a decision on the merits, the DOJ must show that its likelihood of success on the merits and the threat of irreparable harm outweigh any potential harm to the defendant and any oppos - ing public interest in granting the injunction. To prove a Section 7 violation and obtain a permanent injunc - tion, the DOJ has the burden to demonstrate with a “reasonable probability” (ie, greater than a “mere pos - sibility” but less than a “certainty”) that the merger will, or currently does, substantially lessen competi - tion. Frequently, courts collapse the preliminary and final injunction hearings into one. The losing party may appeal to the federal court of appeals for the relevant circuit. FTC The most common path that the FTC follows to chal - lenge a proposed merger is to seek a preliminary injunction in federal district court under Section 13 (b)
of the FTC Act, while simultaneously filing an adminis - trative complaint under Part 3 of the FTC Rules seek - ing an order that the transaction violates the FTC Act (“Part 3 proceedings”). If a transaction has already closed, the FTC proceeds under Part 3 only. If the FTC fails to obtain a preliminary injunction (and does not appeal or loses an appeal of the preliminary injunction decision), its current policy is to discontinue Part 3 proceedings unless continuing to do so would serve the public interest; such cases are exceedingly rare. To obtain injunctive relief under Section 13 (b), the FTC need only make “a proper showing that, weighing the equities and considering the Commission’s likelihood of ultimate success, such action would be in the pub - lic interest”. This is potentially a lower standard than the “balancing of the equities” standard applying to DOJ preliminary injunction cases. Administrative complaints are litigated before an administrative law judge (ALJ), an FTC employee appointed by the Office of Personnel Management. The ALJ’s recommended decision is automatically reviewed by the full Commission, which will issue its own decision and order that may then be reviewed by the federal court of appeals. 5.2 Parties’ Ability to Negotiate Remedies The Agencies have traditionally accepted remedies to address competitive concerns. Over the last several years, both Agencies have expressed a strong pref - erence for structural remedies and scepticism of the effectiveness of behavioural remedies. In the Biden administration, both Agencies indicated that merger remedies will only be available as a way to address competitive concerns in exceptional cases; however, the new Trump administration leadership has indicat - ed a return to acceptance of merger remedies. While remedy discussions may take place at any stage in the review process, they rarely begin before the Agency staff have investigated the transaction and identified concerns. In transactions with narrow but obvious concerns, parties may approach the Agency early with a pre-arranged “fix”. The FTC’s 2012 Negotiating Remedies Manual pro - vides insight into its negotiating process and require -
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