US-EU
Merger Working Group
Best Practices on Cooperation in Merger Investigations
This document sets forth best practices which the United
States federal antitrust agencies and the Commission of the European Union will seek to
apply, to the extent consistent with their respective laws and enforcement
responsibilities, when they simultaneously review the same merger transaction.(1) A number of these best practices already are routinely employed
informally between the US and EU. With that in mind, this statement of best practices
seeks to set out the conditions under which trans-Atlantic inter-agency cooperation in
merger investigations should be conducted, while at the same time confirming and building
upon current good practice.
Objectives
1. In today's global economy, many sizeable transactions
involving international businesses are likely to be subject to review by the EU and by the
US. Where the US and EU are reviewing the same transaction, both jurisdictions have an
interest in reaching, insofar as possible, consistent, or at least non-conflicting,
outcomes.(2) Divergent approaches to assessment of the likely impact
on competition of the same transaction undermine public confidence in the merger review
process, risk imposing inconsistent requirements on the firms involved, and may frustrate
the agencies' respective remedial objectives.
2. These best practices are designed to further
enhance cooperation in merger review between the United States Department
of Justice
("DOJ") or the U.S. Federal Trade Commission ("FTC") (hereafter
referred to as the "US"),(3) on the one hand,
and the European Commission (hereafter referred to as the "EU"),
on the other. They are intended to promote fully-informed decision-making
on the part of both sides' authorities,
to minimize the risk of divergent outcomes on both sides of the Atlantic,
to facilitate coherence and compatibility in remedies, to enhance the efficiency
of their respective
investigations, to reduce burdens on merging parties and third parties, and
to increase the overall transparency of the merger review processes.
3. Given legal constraints existing in both jurisdictions,
effective inter-agency coordination between the US and the EU depends to a considerable
extent on the cooperation and good will of the merging parties, and to a lesser extent on
third parties. In particular, cooperation is more complete and effective when the merging
parties allow the agencies to share information the disclosure of which is subject to
confidentiality restrictions. In addition, coordination between the agencies is most
effective when the investigation timetables of the US and the EU run more or less in
parallel so that the investigative staffs of each agency can engage with one another and
with the parties on substantive issues at similar points in their investigations. The
agencies intend, therefore, to work cooperatively with one another and with the parties,
as appropriate, to promote such timetable coordination. At the same time, the EU and US
agencies recognize that many considerations go into confidentiality waiver and transaction
timing and/or notification decisions and that these decisions are within the discretion of
the merging parties. Accordingly, it should be emphasized that any party's choice not to
abide by some or all of the agencies' recommendations will not in any way prejudice the
conduct or outcome of the agencies' investigations.
Coordination on Timing
4. Cooperation is most effective when the investigation
timetables of the reviewing agencies run more or less in parallel, recognizing there are
differences between US and EU merger review processes. To that end, the agencies should
endeavor to keep one another apprised of important developments related to the timing of
their respective investigations throughout the course of their reviews of merger
transactions subject to review by the US and the EU.
5. In appropriate cases, the reviewing agencies should offer
the merging parties an opportunity to confer with the relevant EU and US staffs jointly to
discuss timing issues. Such a conference will be most beneficial if held as soon as
feasible after the transaction has been announced. At this conference, the agencies and
parties should be prepared to discuss ways to synchronize the timing of the US and EU
investigations, to the extent possible under EU and US law respectively. Topics addressed
may include the appropriate times to file in the US and EU, suggested timeframes for the
submission of documents or other information, and, where appropriate, the prospect of a
timing agreement (in the US) and/or a waiver from the obligation to notify within seven
days of the conclusion of a binding agreement (in the EU). The success of this effort
depends on the active participation and cooperation of the parties, and would, in most
cases, require the parties to discuss timing with the agencies before filing in either
jurisdiction.
Collection and Evaluation of Evidence
6. In significant matters under review by both jurisdictions,
the agencies should seek to coordinate with one another throughout the course of their
investigations and keep one another apprised of their progress. This may include sharing
publicly available information and, consistent with their confidentiality obligations,
discussing their respective analyses at various stages of an investigation, including
tentative market definitions, assessment of competitive effects, efficiencies, theories of
competitive harm, economic theories, and the empirical evidence needed to test those
theories. Views on necessary remedial measures, and similar past investigations and cases,
also may be discussed. The agencies also may discuss and coordinate information or
discovery requests to the merging parties and third parties, including exchanging draft
questionnaires to the extent permitted by the respective jurisdictions' laws and
regulations.
7. Waivers of confidentiality executed by merging parties
enable more complete communication between the reviewing agencies and with the merging
parties regarding evidence that is relevant to the investigation. This results in more
informed decision-making and more effective coordination between the reviewing agencies,
thereby helping to avoid divergent analyses and outcomes, as well as expediting merger
review. Accordingly, as soon as feasible after the announcement of a transaction that
requires review by the US and EU, the staffs of the reviewing agencies should, in
appropriate cases, enter into discussion with the parties with a view to requesting the
possible execution by the merging parties of confidentiality waivers, providing sample
waiver letters if necessary. The reviewing agencies should, where appropriate and
feasible, also encourage the merging parties to allow joint EU/US agency interviews with
party executives and joint conferences with the parties.
8. Similarly, waivers of confidentiality executed by third
parties enable more complete communication between the reviewing agencies and with third
parties and can reduce the investigative burden imposed on third parties. Where
appropriate, the reviewing agencies may, therefore, request that third parties waive
confidentiality, or simply request that third parties provide the same information
divulged to one reviewing agency to the other. The agencies may also encourage joint
interviews and conferences with third parties, where appropriate and feasible.
Communication Between the Reviewing Agencies
9. The reviewing agencies will, via liaison officers or
otherwise, contact one other upon learning of a transaction that appears to require review
by both the US and EU.
10. At the start of any investigation in which it appears
that substantial cooperation between the US and EU may be beneficial, each agency should
designate a contact person who will be responsible for: setting up a schedule for
conferences between the relevant investigative staffs of each agency; discussing with the
merging parties the possibility of coordinating investigation timetables (see Section II
above); and coordinating information gathering or discovery efforts, including seeking
waivers from the merging parties and from third-parties.
11. At the start of any investigation in which it appears
that substantial cooperation between the US and EU may be beneficial, the relevant DOJ
Section Chiefs/FTC Assistant Directors and the EU Merger Task Force Unit Head (or their
designees) should seek to agree on a tentative timetable for regular consultations between
them on the progress of their investigations. The timetable for consultations will take
into account the nature and timing of the transaction. Consultations normally should
occur: (a) before the US closes its investigation without taking action; (b) before the US
issues a second request; (c) no later than three weeks following the initiation of a Phase
I investigation in the EU; (d) before the EU opens a Phase II investigation or clears the
merger without going to Phase II; (e) before the EU closes a Phase II investigation
without issuing a Statement of Objections or approximately two weeks before the EU
anticipates issuing its Statement of Objections; (f) before the relevant US DOJ/FTC
section/division investigating the merger makes its case recommendation to the relevant
DOJ DAAG or the FTC Bureau Director; and (g) at the commencement of remedies negotiations
with the merging parties. Discussions may also take place at any other point the DOJ
Chiefs/FTC Assistant Directors and the EU Unit Head find useful.
12. In some cases, consultations may be appropriate
between senior competition officials for the EU (the Competition Commissioner,
Director General
for Competition, or Deputy Director General for Mergers, as appropriate)
and their counterparts at the Antitrust Division of the Department of
Justice (the Assistant
Attorney General for Antitrust or the relevant DOJ Deputy Assistant Attorney
General ("DAAG"), as appropriate) or the Federal Trade Commission
(the Chairman, Director of the Bureau of Competition, or Deputy Director
of the Bureau of Competition, as
appropriate). In such cases, consultations are likely to be particularly
useful: (a) shortly before or after the US issues a second request and
the EU initiates a Phase II
investigation; (b) approximately one week before the EU anticipates issuing
its Statement of Objections; (c) approximately one week after the relevant
DOJ/FTC section/division
investigating the merger makes its case recommendation to the relevant DOJ
DAAG or FTC Bureau Director; and (d) prior to a decision by the Antitrust
Division or FTC to challenge
a merger or by the Competition Commissioner to recommend that the European
Commission prohibit a merger. Consultations may also take place between
their economic counterparts.
These officials may find it useful to confer at other points in the investigation
as well.
13. Pursuant to the terms of the Administrative Arrangements
on Attendance of 1999, the US and EU, as appropriate, may attend certain key events in the
other's investigative process. These include (a) the EU's Oral Hearing and (b) the merging
parties' presentations to the Assistant Attorney General or Deputy Assistant Attorney
General or to the Director or Deputy Director of the Bureau of Competition at which the
parties present their arguments prior to the agency's decision whether to take enforcement
action.
Remedies/Settlements
14. The reviewing agencies recognize that the remedies
offered by the merging parties may not always be identical, in particular because the
effects of a transaction may be different in the US than in the EU. Nevertheless, a remedy
accepted in one jurisdiction may have an impact on the other. To the extent consistent
with their respective law enforcement responsibilities, the reviewing agencies should
strive to ensure that the remedies they accept do not impose inconsistent obligations upon
the merging parties. The agencies should, therefore, advise that the parties consider
coordinating the timing and substance of remedy proposals being made to the EU and US
agencies, so as to minimize the risk of inconsistent results or subsequent difficulties in
implementation.
15. Consistent with their confidentiality and/or
non-disclosure obligations, the reviewing agencies should seek to keep one another
informed of remedy offers being considered and of other relevant developments with respect
to remedies to the extent they may impact the other jurisdiction's review. Where
appropriate, and consistent with confidentiality and/or non-disclosure obligations, the
agencies should share draft remedy proposals or settlement papers, on which they may
provide comments to one another, and participate in joint conferences with the parties,
buyers, and trustees.
Endnotes:
1. This document is intended to set
forth an advisory framework for interagency cooperation. The agencies reserve their full
discretion in the implementation of these best practices and nothing in this document is
intended to create any enforceable rights.
2. Cooperation between the US and
EU agencies is based primarily upon the 1991 US-EC Agreement on the Application of their
Competition Laws, a principal purpose of which is to avoid conflict in the enforcement of
their antitrust laws.
3. This document assumes that,
consistent with past practice, only one US agency - either the DOJ or FTC - reviews each
pertinent transaction and, accordingly, coordinates with the EU regarding that
transaction.
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