Companies considering transactions that raise serious antitrust issues should have a strategy for getting through the Hart-Scott-Rodino review process before finalizing the deal. That strategy may include proposing a “fix”—a divestiture, license, or conduct remedy—to resolve competitive concerns. Whether a court will consider the proffered “fix” in its analysis of the deal (rather than the “pre-fix” deal) can have a substantial impact on the ultimate outcome of litigation as well as the negotiating dynamic with antitrust agency staff. If staff attorneys know they will be litigating against the original deal with no evidence of the fix, they may be more confident in their case and take a harder line in settlement negotiations. On the other hand, if they may have to litigate a restructured deal in court, they may be motivated to accept a weaker remedy rather than risk losing.
Cooley DC-based antitrust partner Howard Morse and associate Megan Browdie have recently published an article in The Threshold, the ABA Antitrust Section M&A Committee newsletter, exploring recent attempts by merging parties to litigate the fix, i.e., get the court to consider the fix in its analysis. First, the article assesses the agencies’ arguments against courts considering proposed remedies in preliminary injunction proceedings to block proposed mergers and acquisitions. Second, it discusses how courts have addressed the issue of burden of proof in considering proposed remedies. It then reviews two recent cases in which parties attempted to introduce evidence of fixes. In FTC v. Ardagh, the court refused to admit evidence about proposed divestitures. In FTC v. Sysco, by contrast, the agency and the parties briefed and the court assessed the impact of Sysco’s agreement to divest assets to a specific buyer. Finally, in light of these precedents, the article discusses strategies for parties considering proposing remedies.