Insights

On October 4, 2023, Deputy Attorney General (DAG) Lisa O. Monaco announced the Department of Justice’s (DOJ) new safe harbor policy for voluntary self-disclosures made in connection with mergers and acquisitions (Safe Harbor Policy).  Following other announcements from DOJ over the past two years aimed at encouraging voluntary self-disclosures, the Safe Harbor Policy was adopted because DOJ does not want to “discourage companies with effective compliance programs from lawfully acquiring companies with ineffective compliance programs.”  Through this new policy, DOJ is aiming to incentivize acquirers to timely disclose misconduct discovered during the M&A process (including pre-closing diligence and post-closing integration).

A new Belgian law, passed on August 14, 2021, has introduced several important changes to the 2002 law on combating late payment in commercial transactions. These changes entered into force on February 1, 2022.

On November 1, 2019, the Federal Trade Commission (FTC) issued a unanimous opinion unwinding the consummated acquisition of Freedom Innovations by Otto Bock HealthCare. Although the case involves prosthetic knees, the case offers several important lessons for companies within and outside the health care sector contemplating mergers, particularly companies where innovation is a key aspect of competition.

Four years after a consummated merger, a private plaintiff, both a customer and competitor of the merged firm, successfully sued for damages and—for the first time ever—obtained a district court order of divestiture. Steves and Sons, Inc. sued JELD-WEN, Inc., claiming that JELD-WEN’s consummated acquisition of Craftmaster International (CMI) harmed competition in the market for interior molded doorskins.1 Steves’s successful suit serves as a reminder that private plaintiffs have standing if they are harmed by a merger, and also that federal antitrust review does not provide immunity from a post-merger antitrust challenge or substantial remedies.

The head of the Antitrust Division at the Department of Justice yesterday announced several reforms intended to expedite the agency’s merger-review process and limit the burdens on both the DOJ and merging parties. But the proposed reforms also come with “escape valves” for the agency and impose certain obligations on merging parties in return for the prospect of an expedited review. 

Last week the U.S. Court of Appeals for the District of Columbia Circuit affirmed the district court’s issuance of a permanent injunction, effectively blocking the merger of Anthem and Cigna. While the D.C. Circuit ultimately rejected Anthem’s arguments on factual grounds, it also went out of its way to question the legal foundations of the efficiency defense. On Friday, May 5, Anthem announced it will ask for Supreme Court review of the D.C. Circuit’s decision, making this case important for antitrust practitioners and companies defending their deals before the agencies and courts.  

On January 19, the Federal Trade Commission announced that it will increase the jurisdictional thresholds applicable to both the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act) and Section 8 of the Clayton Act. These dollar thresholds are indexed annually based on changes in the U.S. gross national product.

Crowell & Moring LLP is pleased to release its "2015 Antitrust M&A Year in Review." Following a record-breaking year for volume of transactions, this publication provides insight and analysis into developments and trends in global antitrust enforcement of mergers and acquisitions. We examine the antitrust agencies' increasing focus on protecting innovation and emerging forms of competition, requiring broader remedies and more competitive divestiture buyers, and highly scrutinizing transactions in markets where prior consolidation was not challenged. We also look at the agencies' increasing willingness to challenge transactions through litigation, and their relatively successful recent track record.

Since the economic downturn in 2008, the legal market has been in a constant state of change. Companies are demanding budget predictability, shared risk and reward, improved efficiency, more transparency, and a new way to define value, and law firms have rushed to respond. Firms cannot rely on the billable hour as they once did. This development has led to the rise of Pricing Departments whose job it is to manage value-based billing arrangements, profitability, and legal project management. Law firms and in-house counsel need to understand each type of alternative fee arrangement, its strengths and weaknesses, how to accurately scope and budget an engagement, and how to manage it once it has begun.

On May 13, 2015, Marc Wyatt, Acting Director, SEC Office of Compliance Inspections and Examinations (OCIE), delivered an important speech that highlighted legal and compliance topics for investment fund managers.

On March 25, the Securities Exchange Commission (the "Commission") proposed revising Rule 15b9-1 (the "Proposed Rule"), in a move designed to require broker-dealers engaged in proprietary high-frequency trading (HFT) of securities or other applicable products to register with a regulatory association (an "Association"). Since FINRA is the only Association that currently exists, all such HFT firms would be required to register with FINRA. 

Recently, the FTC published its consent decree in Par Petroleum Corporation's (Par) $107 million acquisition of Mid Pac Petroleum (Mid Pac) illustrating that vertical theories of harm in petroleum products mergers may have new life.

On March 25, 2015, the SEC approved the long anticipated Final Rules to implement Title IV of the JOBS Act, or as it is being colloquially called, "Regulation A+." The SEC has published the adopting release for the Final Rules here, and the Final Rules will become effective 60 days after publication in the Federal Register. We will provide a more detailed analysis in an upcoming Client Alert, but we wanted to provide a brief summary of our initial reactions to Regulation A+ (for our report last year on the Proposed Rules for Regulation A+, please see here).

On December 29, 2014, the Small Business Administration issued long overdue proposed amendments to its regulations (with 60 days for comments) to implement many of the provisions of the National Defense Authorization Act of 2013, most notably with a complete overhaul of the calculation of the limitations on subcontracting. Additional proposed revisions include: greater specificity to the identity of interest affiliation test; exemptions from affiliation for small business joint venture members and "similarly situated" subcontractors; a new recertification requirement for mergers/acquisitions occurring after proposal submission but prior to award; changes to the nonmanufacturer rule; and a new reporting mechanism and expanded sanctions related to subcontracting plan compliance. 

Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") on July 21, 2010. A combination of legislation aimed largely at tightened financial regulation, the Dodd-Frank Act also included a few additional disclosure requirements for public companies. One of the last sections of the Dodd-Frank Act, Section 1503, mandates the public disclosure by public companies of mine safety and health violations and statistics in their filings with the U.S. Securities and Exchange Commission (SEC). While the provision was self-executing upon its August 20, 2010 effective date and was fairly detailed in its disclosure requirements, it also required the SEC to promulgate its own set of rules to administer the disclosure program. Because the SEC needed time to wade through its many Dodd-Frank Act rule promulgation requirements from the outset, consider the best form in which to require the disclosure, and solicit comments from the public, its final SEC rule on mine safety disclosure was not released until December 21, 2011.

In a speech on May 6, 2014, the director of the SEC's Office of Compliance Inspections and Examinations (OCIE) gave valuable insights into the substantive review that the OCIE has been performing on registered private equity fund advisers since implementing the presence exam initiative in October 2012. Perhaps the most striking comment is that more than half of all private equity advisers examined by the OCIE have been found to be violating laws or to have material weaknesses with respect to how they assess fees and expenses. 

In light of a recent Delaware decision, corporate sellers should be aware that, absent contractual provisions to the contrary, their attorney-client privilege might transfer along with all of their other rights and privileges in the business to the surviving corporation in a merger. 

In a recent decision involving a company sale that resulted in no payment to the holders of common stock, the Delaware Court of Chancery held, after trial, that the sale did not breach the directors' fiduciary duties even though, the court found, nearly the entire board was conflicted and the sale process was unfair. Although it applied the stringent unitary entire fairness test, the court found in favor of the defendant directors because the common stockholders properly received nothing as the common stock had no economic value at the time of the transaction. In Re Trados Inc. S'hldr Litig., C.A. No. 1512-VCL (Aug. 16, 2013). The court held:

In a recent decision, the Delaware Court of Chancery held that "when a controlling stockholder merger has, from the time of the controller's first overture, been subject to (i) negotiation and approval by a special committee of independent directors fully empowered to say no, and (ii) approval by an uncoerced, fully informed vote of a majority of the minority investors, the business judgment rule standard of review applies." In Re MFW Shareholders Litigation, C.A. No. 6566-CS (Del. Ch. May 29, 2013).

In a recent decision, the Delaware Court of Chancery held that the plaintiff had demonstrated a reasonable likelihood that the single-bidder sale process undertaken by the target's board of directors did not satisfy the board's duties to maximize stockholder value, i.e., its Revlon duties. In Koehler v. NetSpend Holdings Inc.,1 Vice Chancellor Glasscock expressly endorsed the permissibility of single-bidder processes in sale of control transactions, but found that the remainder of the sale process resulted in the board's failure to adequately inform itself as to whether the price per share in the merger was the highest price reasonably available. The court chose, however, not to enjoin the sale because the agreed per share price represented a substantial premium and no viable alternative bidder had emerged during the protracted process, so the price could represent the stockholders' only opportunity to receive a substantial premium for their shares. The decision is an important reminder of the need to ensure that the overall process in a single-bidder sale transaction is reasonably designed to maximize price.