Ooh! Gun jumping! It sounds so exciting; a bit outlaw, a bit Thelma & Louise. Actually, the term refers to an M&A transaction between competitors, where they combine or coordinate their conduct before the deal completes. It's a bad thing. It could land you with eight-figure fines, or even jail time.

The ACCC has just commenced its first gun jumping prosecution. In the firing line are Cryosite and Cell Care, competing suppliers of cord blood and tissue banking services. The (alleged) trouble started when Cryosite agreed to sell its assets to Cell Care.

The deal was that between signing and completion, Cryosite would refer all customer enquiries to Cell Care. This is how the ACCC says that the gun was jumped. The businesses also agreed that Cell Care wouldn't deal with, or market to, Cryosite customers.

When competitors get together and agree to divvy up customers or restrict supply, that's cartel conduct. That's what the ACCC alleges happened here.

In the end, the transaction didn't complete. But apparently Cryosite has stayed out of the market and kept the $500k downpayment it took. That's what kept the ACCC interested, and not in a good way.

The bottom line here is that for M&A transactions between competitors, you need to continue to compete with one another prior to completion. This means you need to be super careful with the drafting of the "pre-completion conduct" section of the sale agreement, ie the bit of the agreement where you agree to what each party can do between signing and completion. Don't agree to integrate your systems, co-ordinate pricing, share customers or carve up the market. Take legal advice on any proposed information sharing or joint customer communications. It's a risky stage of the deal; but the risks are entirely manageable. There's no need to drive the Thunderbird off a cliff.