By: Candace Smyth and John Sanchez
Beginning now with this blog post, Advanced Discovery will periodically report on antitrust in the news, as part of its ongoing practice and knowledge base in Hart-Scott-Rodino Act (HSR) reviews. With its continued attention to mergers and HSR, Advanced Discovery will be present at next week’s American Bar Association’s Antitrust Section’s Spring Meeting in Washington, DC. We look forward to diving deeper into the current trends and legal initiatives on the minds of law firm and corporate counsel.
Updates in Antitrust
- 2014 could be the year known for the big deals. So far, companies are buying up the competition at a pace not seen since the dotcom bubble.
- AT&T completed its purchase of Leap Wireless after winning final regulatory clearance of a $1.2 billion deal that adds customers and airwaves to the second-largest U.S. wireless carrier.
- Yahoo is copying from Yelp’s online reviews of local merchants to enhance its search engine. Yahoo’s search market share has been steadily slipping since the company began relying on Microsoft’s technology to produce most of its results in 2010. That alliance still gives Yahoo the flexibility to add other features to its search results.
- JPMorgan Chase and HSBC Holdings face a European Union complaint as soon as April as the EU bloc’s antitrust chief races to penalize financial companies averting rate-rigging settlements.
- Samsung has agreed to pay $33 million in settlement of allegations that it conspired with other picture tube manufacturers to fix prices and overcharge buyers.
HSR Act Applies to Big and Small Deals – Test the Antitrust Waters Before Swimming
As the first article above indicates, 2014 has already revealed it may be a high acquisition year for companies. Having already seen such acquisitions at levels absent since the dotcom bubble, some see the big deals already filed this year — Comcast/Time Warner, Actavis/Forest Laboratories, Facebook/WhatsApp as a tipping point for demand of deals.
One of the common misperceptions is that the HSR Act applies only to large company deals. Just because deals fall under the effective February 24, 2014 HSR reporting threshold of $75.9 million, however, they could still be scrutinized. In fact, as of August 2013, the DOJ and FTC had already challenged five non-HSR reportable deals in 2013 — as many as agencies had challenged collectively over 2012. The only difference is that the DOJ and FTC may take a look post-merger as an HSR filing pre-merger is not triggered. It has also been reported that Tech Deals are under particular scrutiny.
Emails from key insiders (executives, founders, board directors, counsel) can have an outcome determinative result on how a merger could fail under the HSR Act. The HSR Act applies to any merger that will lessen competition, regardless of company size. Performing an internal investigation and review of insider email correspondence, especially from executive officers, in the context of a possible pre-merger investigation may prove to be a cost-effective strategy to avoid a second request.
Post-merger price increases are one factor that could lead to a post-closing investigation. Also, when companies terminate distributors or begin pulling products from the market, the government may take notice, and it could also prompt an investigation.
In the context of HSR second requests, working with a litigation support company can help you balance the need to preserve and access potentially probative ESI with the need to prevent its associated costs from overwhelming the amount at stake.
Our experts at Advanced Discovery have supported some of the largest and most complex M&A and HSR/second request production projects. Advanced Discovery provides defensible, high-quality, on-time and on-budget litigation support services, from collection to production, including document review project management and review team staffing with dedicated review centers nationwide. Our state-of-the-art review center in Washington, DC (with a capacity of over 300 reviewer seats) was designed specifically to host large scale reviews.
About Candace Smyth: Candace Smyth is vice president of Client Development in Washington, DC. She served a federal clerkship in Dallas, Texas, as an associate at Howrey LLP in antitrust and white collar litigation, and attorney-advisor to the Solicitor at the U.S. Department of the Interior handling Indian litigation. Ms. Smyth believes that a solid, smart eDiscovery strategy and team will support a balanced and seamless approach to your antitrust matters.