Non-HSR Reportable Transactions Determining Merger Clearance - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A Non-HSR Reportable Transactions Determining Merger Clearance Options, Conducting Antitrust Risk Assessment, and Minimizing Likelihood of Government Investigation WEDNESDAY, JUNE 5, 2013 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: J. Robert Robertson, Partner, Hogan Lovells US , Washington, D.C. Laura Kam, Of Counsel, DLA Piper , Phoenix Mary Anne Mason, Of Counsel, DLA Piper , Washington, D.C. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

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Post Acquisition Challenges J. Robert Robertson* *My ideas and public documents, and no one else ’ s

Must Haves: Story & Strategy! • The Story/Order of Proof • Experts • Status Opening • Go After Third Parties • Discovery To Get Admissions • Attack & Defend Privilege • Prepare Witnesses Often • Prepare for Trial 6

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In re Polypore International “ Daramic ” Dkt. 9327 Complaint Counsel Closing Argument Confidential: Contains in Camera Material 14

The Trial • May 12-June 12, 2009 • 2,100 admitted exhibits • 35 Witnesses • 2,329 pages of post-trial briefing 15

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Westcliff ’ s Entry into IPA Contracting Did Not Affect LabCorp ’ s Bids $103 Before Entry After Entry 102 101 Price (U.S. Dollars) 100 99 98 7 1. LabCorp did not bid more aggressively after Westcliff ’ s entry 96 2. LabCorp ’ s bids were not lower when Westcliff was mentioned as a competitor 95 94 LabCorp ’ s Bids Westcliff Was Mentioned As a Competing Bidder 26 Note: Data are hypothetical and for illustrative purposes only.

LabCorp ’ s Prices Did Not Fall After Westcliff ’ s Entry into IPA Contracting $100.75 100.50 100.25 Price (U.S. Dollars) 100.00 99.75 99.50 99.25 99.00 98.75 Before Entry After Entry 98.50 Westcliff LabCorp The Benchmark 27 Note: Data are hypothetical and for illustrative purposes only.

J. Robert Robertson Hogan Lovells US Washington, D.C. 202.637.5774 robby.robertson@hoganlovells.com 28

No Non-HSR HSR Re Repo port rtable able Tr Tran ansa sact ctions ions Stra St raffo fford rd We Webi bina nar Ju June ne 5, 5, 201 2013 Mary Anne Mason, Esq. Laura Kam, Esq.

Topic Overview: Risk Assessment and Clearance Strategies  Assessing the Risk of Government Detection  Strategic Options for Obtaining Merger Clearance  Timing Strategies in Merger Investigations  Strategies for Avoiding an Investigation 30

Assessing the Risk of Government Detection  Assess both substantive antitrust risk and likelihood of detection  Potential Red Flags:  Trade press reports of the merger  Industries were the focus of prior antitrust enforcement efforts  Complaining third parties  Involvement of foreign competition authorities 31

Assessing the Risk of Government Detection  Industries in the Agencies' Cross-hairs  Healthcare  Pharmaceuticals  Energy  Financial services  E-commerce Pharmaceutical mergers are the most likely to be investigated. In fiscal years 1996 to 2011, the FTC reviewed 122 horizontal pharmaceutical mergers and sought relief in 119 (see FTC: Horizontal Merger Investigation Data Report (Jan. 2013) ) Link to: ( available at http://www.ftc.gov/os/2013/01/130104horizontalmergerreport.pdf) 32

Assessing the Risk of Government Detection  Third-party Complaints Transacting parties' customers, competitors, suppliers and other third parties may complain. The FTC and DOJ attribute varying weight to third-party complaints depending on:  The factual support underlying the complaint  The third party's role in the market  Whether the complaint alleges harm to competition in the market 33

Assessing the Risk of Government Detection  Complaining Customers  Between fiscal years 1996 and 2011, the FTC received strong customer complaints in 114 mergers (see FTC: Horizontal Merger Investigation Data Report (Jan. 2013 )). The FTC ultimately took enforcement action against 111, or 97%. By contrast, in 122 deals without strong customer complaints, the FTC only took action against 53, or 43%. Link to: ( available at http://www.ftc.gov/os/2013/01/130104horizontalmergerreport.pdf) 34

Assessing the Risk of Government Detection  Complaining Competitors  Most impactful in highly concentrated industries with long- term or exclusive customer contracts, where the transaction may foreclose the competitor from certain key customers or enough customers to prevent it from competing.  The FTC and DOJ also heed competitor complaints in vertical transactions where the competitor does business with the upstream or downstream party and raises concerns of being:  Cut off from supply or distribution  Harmed by post-acquisition information sharing between the parties of the competitor's competitively sensitive data 35

Assessing the Risk of Government Detection  Involvement of Foreign Competition Authorities  Communication and cooperation among national competition enforcement authorities is now commonplace, even though the FTC and DOJ need the parties' permission to share confidential information with their foreign counterparts.  The antitrust agencies can learn about the issues under investigation overseas through:  official channels of cooperation  complaining parties  the media 36

Strategic Options for Obtaining Merger Clearance  Fingers Crossed Strategy  Used if the apparent risk of both competitive harm and detection is low  Decision to proceed with the transaction without incurring the costs of a merger analysis or preparing for a merger investigation  Advisable if there appear to be multiple competitive alternatives in the market and a limited risk of third-party, particularly customer, complaints 37

Strategic Options for Obtaining Merger Clearance  Wait-and-see Strategy  Used when the deal poses some competitive issues, but those issues can be explained away with factual support  Best for deals where there is some indication that customers might complain or there is some risk of government detection 38

Strategic Options for Obtaining Merger Clearance  Voluntary Access Strategy  Used when risk of investigation is high  Parties direct counsel to contact antitrust agencies to alert them to the transaction before closing  Minimizes the huge downside and expense of potentially having to defend and unwind a consummated transaction  Advisable when:  At least one of the parties was the subject of criminal antitrust investigation  FTC or DOJ investigated either party's last acquisition in the industry  Customers are complaining and have already contacted, or have threatened to contact, the Agencies 39

Strategic Options for Obtaining Merger Clearance  Fix-it-first Strategy  If reasons exist for contacting the agencies before closing the deal, consider whether there is a quick end to any merger investigation by agreeing to a merger remedy upfront, typically a divestiture.  Recommended if the divestiture eliminates the agency's competitive concerns and there is a likely buyer for the divested business. This is especially true if the government believes it has a compelling case to stop the transaction. 40