On October 14, 2011, the U.S. antitrust agencies --the Federal Trade Commission and the Department of Justice-- and the European Commission’s DG Competition recognized the 20th anniversary of the 1991 U.S.-EU bilateral antitrust agreement by issuing revised Best Practices for Coordinating Merger Reviews. The revised Best Practices update the U.S. and EU agencies’ 2002 Best Practices to better reflect their current cooperation practices with respect to mergers subject to review in the U.S. and EU. The practices have evolved as the agencies have worked together on a “significant number” of transactions since the 2002 Best Practices were issued.

The 2011 Best Practices build on the 2002 Best Practices in the following ways:

• they encourage parties to inform the reviewing agencies of a merger requiring review early-- prior to filing;

• they emphasize the role that the parties can play to facilitate cooperation, especially with respect to timing coordination;

• they recognize that coordination is in the parties’ interest, assisting in the avoidance of inconsistent or conflicting outcomes or implementation of remedies, particularly when the remedies being considered include an up-front buyer and when the EU agency is considering a remedy in its Phase I investigation;

• they acknowledge the increasing frequency of cooperation with other agencies internationally;

• they explicitly provide for consultation between the reviewing agencies’ economists; and

• they recognize that legal confidentiality privileges differ, and provide that as a Best Practice “the agencies will accept a stipulation in parties’ waivers given to DG Competition that excludes from the scope of the waiver evidence that is properly identified by the parties as, and qualifies for, the in-house counsel privilege under U.S. law.”

The 2011 revisions carry on the following goals from the 2002 Best Practices:

• Early and continuous communications between agencies;

• Coordinated timing of agency substantive review;

• Agency access to, and ability to share, confidential and privileged information; and

• Consistent, or at least non-conflicting, remedies or other outcomes.

While agency communication and coordinating remedies are largely dependent upon the agencies’ actions, the Best Practices regarding timing and evidence rely heavily on the parties’ cooperation with the agencies. In the revised Best Practices, the agencies note that the parties have the right to not follow the Best Practices, and this decision “will not of itself prejudice the conduct or outcome of the agencies’ investigations.” The following summarizes the 2011 Best Practices.

Early and Continuous Communication Between Agencies

Depending on the characteristics of the particular merger under review, agency staff and officers agree to coordinate a timetable for agency consultations at the start of any investigation that may require substantial cooperation between the agencies. The Best Practices note that while “it will normally be beneficial to keep each other informed on a continuous basis,” there are specific “key stages of the investigation” when communication is most important. Such stages range from “before the relevant U.S. agency either closes an investigation without taking action or issues a second request” through “prior to a reviewing agency’s final decision to seek to prohibit a merger.” Consultations between senior leadership and economists of the agencies are also encouraged.

Coordination on Timing

The agencies have agreed to keep each other informed as to investigation timetables and timing developments, and merging parties are encouraged to discuss with the agencies possible ways to coordinate the timing of the U.S. and EU investigations. To facilitation this coordination, Best Practices are for the merging parties to provide basic information about the parties and the merger to the reviewing agencies early in the process. Based on this information, the agencies and parties can discuss the appropriate times to file and submit documents.

Allowing the agencies time to coordinate their reviews is encouraged, either by submitting parallel filings or timing the filings so that the agencies can cooperate at key stages of the agencies’ respective investigations. Coordination can be achieved through timing agreements and waivers of mandated review period timing.

Access to and Sharing of Evidence

Consistent with relevant confidentiality obligations, the agencies agree to discuss their respective analyses of “market definitions, assessments of competitive effects and efficiencies, theories of competitive harm, economic theories, and empirical evidence needed to test those theories.” Views on remedies and relevant past investigations also are encouraged. The agencies also agree to coordinate information requests and investigations in a desire to be more efficient.

The agencies desire that the merging parties waive confidentiality, noting that “such confidentiality waivers have become routine practice in cases requiring cooperation” between the U.S. and EU. “Where appropriate [the agencies may also request waivers of confidentiality from third parties to] enable more complete communication between the reviewing agencies…and … reduce the investigative burden imposed on third parties.”

Coordination of Remedies and Settlements

To the extent consistent with their respective law enforcement responsibilities, the agencies agree to work toward consistent and non-conflicting remedies. In order to achieve this, the agencies reiterate that “[i]t is clearly in the interests of the merging parties to coordinate the timing and substance of remedy proposals being made to the U.S. agencies and DG Competition…. This normally also will require coordination on the overall timing of the investigations so as to allow for meaningful cooperation between the reviewing agencies…” The agencies warn that if the timing of filings and investigations are not coordinated, the agencies may not be able to agree on consistent and non-conflicting remedies. In order to achieve consistent outcomes, the agencies agree to share draft remedy proposals and participate in joint negotiations with the parties.

Comment

The Best Practices are helpful in setting forth the U.S. and EU agencies’ expectations of each other and what they would like to see from merging parties and relevant third parties. It is important to note, however, that the Best Practices are not binding on transaction parties, who should assess the particular facts of their situation in formulating their strategy with respect to (i) the disclosure of proprietary confidential or privileged information, (ii) conforming to timing deadlines unrelated to business reality, and (iii) the evaluation of competitive conduct under various applicable merger control laws.