Since 1991, the United States and the European Community have been cooperating on competition policy pursuant to a bilateral agreement. The primary goal of the agreement is “to promote cooperation and coordination and lessen the possibility or impact of differences between the Parties in the application of their competition laws.” Based on twenty years of cooperation, the Antitrust Division of the Department of Justice and the Federal Trade Commission (“U.S. agencies”) on the one hand, and the Directorate-General for Competition of the European Commission (“DG Competition”) on the other, issued revised Best Practices on Cooperation in Merger Investigations (“Revised Best Practices”) on October 14, 2011. The Revised Best Practices, an advisory framework for interagency cooperation when the agencies review the same transaction, are the first update since the original document issued in 2002.
While the objectives and many of the other provisions of the Revised Best Practices remain consistent with the original, this revision “builds upon the experience gained in a significant number of cases since 2002.” This briefing provides a brief overview of the key changes to the advisory framework:
Objectives: In recognition of the increasing role other competition authorities around the world play with respect to their reviews, the U.S. agencies and DG Competition will seek to cooperate with those other authorities pursuant to either multilateral guidelines/principles, or through bilateral agreements. Companies are advised to inform the U.S. agencies and DG Competition of the competition authorities from other jurisdictions that will, or are expected to, review the same transaction.
Communications between Reviewing Agencies: As with the original, the Revised Best Practices outline the procedures and timing for joint consultations between U.S. agencies and DG Competition upon learning of a transaction that appears to require review in both jurisdictions. Firms should note that DG Competition may now discuss preparatory steps with the U.S. agencies in cases that are in the process of being referred to the Commission by the Member States, particularly if the parties have granted a confidentiality waiver at the prenotification phase.
Coordination on Timing: The Revised Best Practices, like the original, recommend active communication between the U.S. agencies and DG Competition in order to coordinate investigation timetables with respect to the same transaction. However, the Revised Best Practices place a greater emphasis on the role of the parties in coordinating the phases of the reviewing agencies’ investigations. Promptly after informing the reviewing agencies of a transaction that requires both agencies to investigate, parties are advised to provide the following information:
- the names and businesses of the parties;
- the geographic areas in which they operate;
- the sector(s) involved, including a short description for both U.S. and E.U.;
- the names of other jurisdictions in which they have made or intend to make a filing;
- the actual or anticipated date for the filing in each jurisdiction; and
- any issues relevant to the timing of the transaction.
Further, the Revised Best Practices encourage parties either to make parallel filings in the U.S. and E.U., or to time their filings in such a way as to allow the agencies to cooperate at key decisionmaking stages of their respective investigations. The Revised Best Practices also discuss ways in which parties can facilitate agency cooperation throughout the process, identifying specific situations where this is particularly desirable and procedures whereby parties can facilitate this goal. Parties are discouraged from timing filings in such a way that could result in a final decision in one jurisdiction before a filing is made in the other.
Collection and Evaluation of Evidence: There is little substantive change in the Revised Best Practices with respect to information sharing between the reviewing agencies. However, the Revised Best Practices specifically note that “confidentiality waivers [executed by parties] have become routine practice in cases involving cooperation between DG Competition and the U.S. agencies.” Further, discussions with parties for the purposes of obtaining such waivers “normally [occur] at DG Competition’s pre-notification stage.”
Remedies/Settlements: This section of the Revised Best Practices is greatly expanded from the original and emphasizes the crucial role that parties play in ensuring consistent remedies. Specifically, parties should ensure that the timing of filings (and therefore the investigations) allow the reviewing agencies the opportunity to cooperate on the substantive assessment of the transaction so as to permit consistent and non-conflicting remedies between the two jurisdictions. Also, practical experience has revealed that early and frequent consultations among parties and reviewing agencies is especially important where an up-front buyer remedy is under consideration. The Revised Best Practices note that cooperation among all parties throughout the remedial process may well result in a single proposal for a remedial package and cites specific aspects of remedies that might be identical or similar.