Antitrust drivers in M&A
Friday 17 February 2023
Veronica Franco
Ferrere, Asunción
vfranco@ferrere.com
Report on the joint session of the Antitrust Section and the Latin American Regional Forum at the IBA Annual Conference in Miami
Wednesday 2 November 2022
Session Co-Chairs
Fernando Carreno Von Wobeser & Sierra, Mexico City
Caltriona Hatton Baker Botts, Brussels
Speakers
Benedict Bleicher Rio Tinto, London
Mike Hollingworth Competition Bureau Canada, Ottawa
Alastair Mordaunt Freshfields Bruckhaus Deringer, Hong Kong
Nisha Kaur Uberoi Trilegal, Mumbai
The Co-Chairs opened the session by introducing some antitrust challenges facing M&A. Challenges include stricter controls, divergent results in different jurisdictions, regulators becoming more suspicious and facing more pressure to protect consumer interest, and other goals, like sustainability and public interest. On the other hand, legislation is giving authorities more powers, making the filing process more complicated.
Benedict Bleicher started by giving his view on how companies see this challenging situation. Bleicher mentioned that assessing whether a merger control filing is triggered used to be a simple assessment; this has changed.
Some of the most alarming concerns are the divergent criteria regarding turnover, the meaning of control and raising substantive concerns even when transactions are below the legal thresholds. There is an increasing challenge when coordinating with local counsel in multiple jurisdictions, which results in increased transaction costs. In the specific case of the United Kingdom, it was mentioned that the authority will never decline jurisdiction when it considers that the transaction may produce effects in the UK.
Mike Hollingworth explained the current situation in Canada. The authority can generally review anything at any time, but there is a one-year limitation post-closing and no suspensory period. This represents a challenge for the authority, more specifically, the merger intelligence unit that needs to deal with this. There is greater attention paid to notifiable deals, mainly technology problems that do not reach thresholds, but can create competition concerns. Finally, it was mentioned that it was not uncommon in Canada to challenge a deal after the one-year period, but this only happens from time to time.
Alastair Mordaunt gave an overview of the situation in China and the Asia region. It was mentioned that the Chinese Government is unlikely to expand its thresholds because, in practice, every deal can be assessed at the option of the authority.
As explained by Nisha Kaur Uberoi, there is a bill in India that is likely to become law in the coming months. The bill will introduce substantial changes to thresholds and exceptions that are expected to result in a substantial increase in filings in India.
She also explained in detail a case involving Amazon, which according to the authority, omitted its intention to acquire a business. Ultimately it was ruled that Amazon suppressed material information and failed to inform the authority about a consummated transaction. The result was a sentence from the commission to unwind the transaction and the imposition of fines on Amazon.
The discussion went further and involved other challenges facing M&As.
Gun jumping
There is increasing tension towards gun jumping and buyers who want to get their hands on a target versus longer waiting times.
The challenge of drawing a line between deal planning and integration, as well as information exchange, was largely discussed among the panellists.
Dealing with multiple jurisdictions
Another issue that comes up frequently is dealing with filings in multiple jurisdictions. The most typical questions in these situations are how to manage the timing and how to prioritise. The panel agreed that there is no one-size-fit-all answer, but it is important to consider that some jurisdictions are quick, while others have longer review periods. It is also important to flag which key regulators and jurisdictions are more likely to have competition concerns.
It was noted that some Asian jurisdictions are usually left until last, and some authorities and regulators have expressed concern about this situation. It was also noted that, even if the transaction is not formally being filed, it is a good thing to approach the authority in advance.
Waivers
The panel later addressed waivers. It was noted that some authorities will ask for waivers and others will not. Some jurisdictions, like Singapore, require such waivers in the filing to proceed with the analysis.
As to the reasons for pushing back a waiver, the panel explained factors such as timing and criteria. They also noted that sometimes a waiver may benefit the case either due to the criteria (that will become more universal and therefore consistent across jurisdictions) and because the sharing of information may actually expedite the timing of the analysis.
In the particular case of Mexico, Fernando Carreno mentioned that it is common for the authority to coordinate with other jurisdictions, even when the waiver is not granted.
Remedies
An additional matter to bear in mind when handling multiple jurisdictions is whether the transaction is going to raise remedy issues and whether that remedy will be global or not. If the latter is the case, it may be better to focus on the lead regulator.
In the United States, there is a big shift that is discouraging companies from doing difficult deals. Authorities in the US will usually not apply behavioural remedies, and divestitures are likely to happen. The debate extended to the discussion of divergent approaches in jurisdictions. Some jurisdictions will prefer structural remedies and others will rather apply behavioural remedies.
Another related challenge involving global remedies is those transactions that, in addition to global remedies, will require local remedies. It is important to analyse how those deals will be impacted by local laws and whether additional matters should be contemplated in such analysis (competition related).
Other matters to be taken into account
Governments are finding more ways to scrutinise deals. In Canada, other matters are evaluated by a local bureau, including employment, technology and other matters that are relevant for the country.
In the European Union, increasing numbers of countries are introducing foreign investment reviews. In addition, government affairs and public interest tests are increasingly reviewed as part of competition analysis.
South Africa may have a public interest criterion when reviewing a case, but this is not the case in the rest of the world (ie, the EU and Latin America).