In the United States, antitrust law is a collection of federal and state government laws that regulates the conduct and organisation of business corporations, generally to promote fair competition for the benefit of consumers. These laws, first, restrict the formation of cartels and prohibit other collusive practices. Second, they restrict the mergers and acquisitions of organisations that could substantially lessen competition. Third, they prohibit the creation of a monopoly and the abuse of monopoly power.
In relation to mergers and acquisitions there are some general guidelines that need to be adhered to when undertaking a sale or merger of businesses, which we have outlined in this article
Consider the Contents of All Deal Documents
When drafting and releasing documents assume all documents may be reviewed by a government antitrust investigator. Sensitive documents such as:
- confidential information memorandums,
- materials evaluating synergies,
- documents relating to market share, competition and potential sales growth,
- documents about the industry, business plans and strategy, and
- all documents that may be considered confidential
should be reviewed by legal counsel prior to being provided to buyers or merger partners.
The Business Should Continue Operating as Usual
You must continue to compete vigorously with the deal party until closing. Prior to closing you must ensure you do not:
- Agree with your deal partner not to compete for certain customers, projects or geographic territories;
- Hold yourself out as having already merged;
- Jointly negotiate with suppliers or vendors, and;
- Manage the other company’s business decisions.
Due Diligence Pressure Points
When undertaking due diligence the company must undertake additional considerations to avoid releasing information to people who are not required to be in the know. The company should:
- Ensure only individuals that need to know are involved;
- Ensure only information that is necessary to evaluate transaction is provided;
- Consider maintaining a list of individuals and dates they were involved in the deal;
- Consider Implementing a clean team arrangement and or limit certain information to outside counsel only, and;
- Ensure competitively sensitive information such as strategies, plans and costs are not shared with competitors.
Find Out More
The US antitrust laws can be a minefield if you are considering undertaking interjurisdictional transaction and must be considered carefully. Quinn M&A’s team of expert M&A advisors can assist you with completing company sales, mergers and acquisitions. To meet with one of our team, call us on 1300 784 667 or email info@quinnma.com.au.
