USA Law and Practice Contributed by: Bradley Justus, Lisl Dunlop, Josh Jowdy and Sandhya Taneja, Axinn, Veltrop & Harkrider LLP
FTC The most common path that the FTC follows to challenge a proposed merger is to seek a pre - liminary injunction in federal district court under Section 13 (b) of the FTC Act, while simultane - ously filing an administrative complaint under Part 3 of the FTC Rules seeking an order that the transaction violates the FTC Act (“Part 3 pro - ceedings”). 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 dis - continue 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 Com - mission’s likelihood of ultimate success, such action would be in the public interest”. This is potentially a lower standard than the ”balanc - ing of the equities” standard applying to DOJ preliminary injunction cases. Administrative complaints are litigated before an administrative law judge (ALJ), an FTC employ - ee appointed by the Office of Personnel Man - agement. 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 rem - edies to address competitive concerns. Over the last several years, both Agencies have expressed a strong preference for structural remedies and scepticism of the effectiveness of
market faster than would be possible without the JV. JVs may harm competition if they reduce the JV parties’ incentives to compete against one another, if the parties’ independent decision- making is limited outside the JV because of combined control or combined financial inter - ests, 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 transaction or unwind a completed transaction, the DOJ must file in federal district court a com - plaint and motions for a preliminary injunction (if the transaction has not closed) and a permanent injunction. To obtain a preliminary injunction to prevent a transaction closing pending a decision on the merits, the DOJ must show that its likelihood of success on the merits and the threat of irrepa - rable harm outweigh any potential harm to the defendant and any opposing public interest in granting the injunction. To prove a Section 7 violation and obtain a permanent injunction, the DOJ has the burden to demonstrate with a “reasonable probability” (ie, greater than a ”mere possibility” but less than a “certainty”) that the merger will, or currently does, substantially less - en competition. 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.
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