Two recent enforcement actions are reminders that antitrust risks continue to exist after a deal is signed and even after it has closed.
In the U.S., the Federal Trade Commission (FTC) challenged Valeant Pharmaceuticals’ 2015 acquisition of Paragon Holdings, a transaction that was not reportable under the Hart-Scott-Rodino Act (HSR Act).
In Europe, the French Competition Authority brought an action against Altice for gun-jumping, the first gun-jumping action brought by the French agency and one of the few brought outside the U.S.
Eighteen months after Valeant’s acquisition of Paragon, the FTC challenged the transaction. Valeant agreed to a settlement that required it to divest all of the Paragon business it acquired.
While unusual in other jurisdictions, the U.S. antitrust agencies regularly investigate and bring enforcement actions against transactions that do not meet the HSR Act's reporting thresholds.
Nothing in the HSR Act, or elsewhere in the U.S. antitrust laws, prohibits review and enforcement against unreported and/or consummated transactions.
Because investigations of unreported transactions are not subject to the strict timelines in the HSR Act, such investigation can be lengthy and wide-reaching. Accordingly, just because a firm does not have to report its transaction does not mean it can relax if that transaction raises antitrust issues.
After Altice obtained clearance from the French Competition Authority (Autorité de la Concurrence, ADC) to purchase SFR, the ADC discovered evidence that Altice had been informed of and involved itself in some of SFR’s corporate decisions before obtaining clearance from ADC.
To resolve the allegations, Altice paid a fine of €80 million.
In most jurisdictions, including the U.S., if a transaction must be reported to the antitrust authorities, the transaction may not be consummated until the reviewing agency has granted clearance.
If one or more of the parties begins to operate less than fully independently before clearance, that is known as “gunjumping.”
Outside the United States, enforcement has varied from sporadic to nonexistent; indeed, the case against Altice is the ADC's first gunjumping enforcement action.
Determining what is permissible and what is prohibited in the period between signing and closing of a reportable transaction is complex. Authorities understand that parties need to engage in some integration planning before closing.
Accordingly, what constitutes gunjumping is highly fact specific and requires consultation with counsel with substantial experience in merger control.