Note that the exchange of information from the merger may contribute to an illegal “gun jump” in violation of HSR law and HSR rules if this leads the buyer to effectively acquire the seller`s economic property before the transaction is completed. See United States v. Computer Assocs. Int`l, Inc. (2002) (The merger agreement required prior buyer approval for the seller in order to offer customers discounts of more than 20% on the list price). Illegal shooting may include the exchange of competition-related information, but also, as a general rule, effective coordination of commercial activities during the pre-merger merger control verification period. Such conduct could also constitute evidence of a self-contained illegal agreement contrary to Section 1 of the Sherman Act. See United States v. Gemstar-TV Guide Int`l., Inc. (2003). The solution: in order to avoid infringements, merging parties should disclose competition information only when necessary to deal with negotiations and diligence, and only under procedural safeguards.
The parties should also rely on the rights defenders of the agreement to advise on other measures to avoid liability. The situation: The Federal Trade Commission (“FTC”) has just published a blog post in which it reminds the parties to the merger to avoid the creation of liability for cartels and abuse of dominance by exchanging competition information during merger negotiations and due diligence. Advocates of cartel rights can take several steps to avoid problematic information exchanges. First, companies should be reminded that the design, maintenance and review of effective protocols to prevent anti-competitive exchange of information during pre-merger negotiations and due diligence is extremely important. Where competition information is to be exchanged for diligence and integration planning purposes, parties should set up third-party consultants, clean teams and other security features that limit the dissemination and use of this information within the parties` companies. Own teams should not include personnel responsible for planning, pricing or competitive strategy. Risk Management: Prepare a process and follow it If the exchange of too much information in the run-up to the merger could be contrary to antitrust legislation, it is important to have a plan to monitor and control the flow of information to third parties. Recent staff experience shows that companies could avoid both the emergence and effective misuse of competition-related information by providing stricter procedural safeguards to prevent the misuse of competitively sensitive information. In another lawsuit, the DOJ challenged the prior agreement between a software developer and the proposed competitor that the seller would seek the buyer`s approval before offering discounts of more than 20 percent on the list price.