On 1 April 2016, Iron Mountain Inc. announced that it has received conditional approval from competition regulators in four key jurisdictions to proceed with its proposed acquisition of rival information management company, Recall Holdings Limited.

The United States Department of Justice (DoJ), United Kingdom Competition and Markets Authority (CMA), Australian Competition and Consumer Commission (ACCC) and Canadian Competition Bureau (CCB) have each provided a green light for the transaction to proceed, subject to Iron Mountain agreeing to take customised remedial steps in each jurisdiction.

With the shareholder vote scheduled for 19 April, the transaction is expected to complete on 2 May 2016.

Australia – ACCC

As reported in our article on 18 March 2016, Iron Mountain offered a court enforceable undertaking to address potential competition concerns raised by the ACCC.

The ACCC announced that it had accepted Iron Mountain’s undertaking on 31 March 2016.

The ACCC chairman, Mr Rod Sims, stated that the ACCC had significant concerns that the transaction, in the absence of the undertaking, would have been likely to substantially lessen competition for physical document management services. This is because “Recall is currently Iron Mountain’s closest competitor for physical document storage. By combining these two companies, the proposed acquisition could have left customers vulnerable to price increases or reduced service levels in a market where there are high costs to switch providers.”

Iron Mountain resolved this concern by undertaking to divest Iron Mountain Australia Holdings Pty Ltd, being the “Divestiture Business” comprising Iron Mountain’s physical document management services and digital document management services business in all States and Territories, except in the Northern Territory.

The effect of the undertaking is therefore that Iron Mountain’s operations in Australia will primarily consist of Recall’s existing Australian operations.

The undertaking requires that, prior to completion, Iron Mountain will separate those parts of the business it will retain, and preserve the Divestiture Business as a separate and independently viable going concern.

From completion the Divestiture Business will be operated by an approved independent manager until sold to a purchaser approved by the ACCC.

Iron Mountain is required to sell the Divestiture Business within a specified time period (not disclosed in the public version of the undertaking) and, if this does not occur, Iron Mountain must appoint an independent sale agent (approved by the ACCC) to effect the sale.

United States – DoJ

Iron Mountain has announced that the transaction has also received approval from the DoJ, subject to Iron Mountain agreeing to divest:

  • Recall’s records and information management facilities in 13 cities – namely, Buffalo; Charlotte; Detroit; Durham; Greenville/Spartanburg; Kansas City; Nashville; Pittsburgh; Raleigh; Richmond; San Antonio; Tulsa; and San Diego;
  • Recall’s records and information management facility in Seattle; and
  • certain Recall records and information management facilities in Atlanta.

The divestment of Recall’s activities in 13 metropolitan areas has been pre-approved by the DoJ with Access CIG LLC agreeing to pay US$80 million for this part of Recall’s business. Any purchaser for the divestment businesses in Seattle and Atlanta must also be approved by the DoJ with Iron Mountain continuing discussions with prospective purchasers. These parts of the business will be subject to a hold separate arrangement from completion, to ensure that they continue to be operated as independently viable going concern.

Iron Mountain agreed to undertake these divestments in order to address the DoJ’s concerns that the transaction would have “harmed records management customers in 15 metropolitan areas by dramatically reducing competition in these markets”.

Assistant Attorney General of the DoJ’s Antitrust Division, Bill Baer, stated that the “result of [the divestments is that], these customers will continue to enjoy the fruits of competition – lower prices and higher quality services” in those 15 metropolitan areas.

United Kingdom – CMA

On 30 March 2016, Iron Mountain announced that the CMA had approved its application to complete the transaction, subject to Iron Mountain placing the entire Recall business located in the UK in a hold separate arrangement until the CMA has completed its review.

The transaction was referred for an in-depth phase 2 investigation in January 2016, and the statutory deadline for the CMA to complete its review is 29 June 2016, with provisional findings due in late April 2016.

If the CMA determines that the transaction would substantially lessen competition in any UK market, it can order divestments.

Canada – CCB

On 31 March 2016, the CCB announced that it had reached a “consent agreement” with Iron Mountain under which Iron Mountain will divest:

  • all of Recall’s records and information management facilities in Edmonton and Montreal (Laval);
  • certain of Recall’s records and information management facilities in Calgary and Toronto; and
  • one of Iron Mountain’s records and information management facilities in Vancouver (Burnaby) and two of Iron Mountain’s records and information management facilities in Ottawa.

Iron Mountain has agreed to undertake these divestments in order to address the CCB’s concerns that “Iron Mountain’s acquisition of Recall would likely have resulted in a loss of competition in the supply of records management services and higher prices for businesses”.

Similar to the conditional approval granted in other jurisdictions, the consent agreement requires Iron Mountain to preserve and hold separate the business of the Canadian divestments, including the appointment of an independent manager.

Under the terms of the consent agreement, the Canadian divestitures must be acquired by a single purchaser that is approved by the Canadian Commissioner for Competition.

Negotiating remedies around the world

It has been a long journey, with Iron Mountain needing to scale multiple peaks and negotiate different remedies, customised to the markets and level of competition in each country. However, it appears that the summit is now in sight.