US Federal Trade Commission (FTC) issued on March 20, 2018, updated guidance regarding compliance with antitrust laws for companies considering acquisitions, mergers, or joint ventures.
While the FTC recognizes that such companies “typically have a legitimate need to access detailed information about the other party’s business in order to negotiate the deal and implement the merger,” information regarding current and future price information, strategic plans, operations and performance may be competitively sensitive.
Sharing of certain sensitive information with a competitor before and during M&A negotiations and the due diligence process may subject companies to liability under the Sherman Antitrust, Clayton Antitrust and Hart-Scott-Rodino Acts even if the FTC declines to take any action regarding the proposed transaction. Specifically, pre-merger information sharing may, among other things, contribute to unlawful “gun jumping” in violation of the Hart-Scott-Rodino Act if it involves actual coordination of business activities, and “the buyer effectively gain[s] beneficial ownership of the seller prior to the close of the transaction.”
Recently, the FTC has charged merging parties with dissemination and misuse of competitively sensitive information for anticompetitive purposes after reviewing and determining that the parties improperly exchanged information that endangered competition by reducing uncertainty about each others’ product offerings, prices, and strategic plans. Potential consequences of an FTC action can range from delayed approval of the merger to an antitrust suit to civil damages.
Full Content: JD Supra
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