USA Law and Practice Contributed by: G. J. Ligelis Jr., Christopher K. Fargo, Alyssa K. Caples and Margaret T. Segall, Cravath, Swaine & Moore LLP
days from the date on which both parties certify that they have “substantially complied” with the second requests. Following the parties’ certification of “substantial compliance” with their respective second requests, the reviewing agency can: • allow the new waiting period to expire or grant ear - ly termination of the new waiting period, in which case the parties are free to close the transaction; • seek a remedy through a consent agreement; or • bring a lawsuit to block the transaction. FDI transactions that do not meet the relevant require - ments to trigger an HSR filing are nonetheless still potentially subject to a substantive competition review, as all investments are subject to the Clayton Act Section 7’s prohibition of acquisitions of stock or assets if “the effect of such acquisition may be sub - stantially to lessen competition or to tend to create a monopoly”, whether or not the investment is notifi - able under the HSR Act. In practice, this will typically only happen if the agencies receive complaints about the investment from customers, competitors or other industry participants. 6.2 Criteria for Antitrust/Competition Review The DOJ or the FTC will assess whether there is any competitive impact of the investment as part of the HSR Act review process. If the reviewing agency determines that there is poten - tial competitive overlap, it will assess the relevant market in which each party operates to determine the competitive impact of the proposed investment. The reviewing agency will consider: • the relevant product and geographic markets; • the level of concentration; and • the increase in concentration as a result of the investment, in order to assess whether there could be any potential unilateral effects, co-ordinated effects and/or any other potential anti-competitive harm. The reviewing agency will also consider any poten - tial synergies or efficiencies from the investment. The
reviewing agency will often collect information from third parties within the industry, such as customers, competitors, suppliers or industry experts, regarding the effect of the transaction. In December 2023, the agencies released the 2023 Merger Guidelines, which broaden the agencies’ traditional approach to review - ing transactions. 6.3 Remedies and Commitments If the reviewing agency determines that it does have competitive concerns with the investment, the parties may propose remedies to address those concerns. Where the agencies’ concerns are about a “horizon - tal” concentration (ie, a combination of competitors in a relevant market), the agencies will require struc - tural relief such as divestiture of assets to mitigate any potential anti-competitive harm. Where the agen - cies’ concerns are “vertical” in nature (ie, a transac - tion between entities at different levels of a produc - tion chain), the agencies may accept behavioural (or conduct) commitments. The agencies will require the relevant remedy to be negotiated and agreed upon in a formal consent decree, which the reviewing agency must approve prior to allowing the parties to close the transaction. While the agencies under the Biden administration had generally been more sceptical of remedies than in prior administrations, the second Trump administra - tion has shown more willingness to resolve competi - tive concerns with remedies. 6.4 Antitrust/Competition Enforcement Transactions that require an HSR filing may not be consummated until the expiration or termination of the waiting period. If the parties consummate the trans - action prior to the end of the waiting period, they will be subject to civil penalties of up to USD53,088 per day and are mandated to complete corrective filings. However, whether or not an investment is subject to or went through the HSR Act review process, the agencies have the ability to challenge the investment, either before or after the investment is made, if they believe the investment will result in anti-competitive harm.
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