Antitrust Provisions In Merger Agreements

Several lessons can be learned from the failure of the Anthem/Cigna transaction. In order to take account of the time needed for the necessary unblocking of antitrust, the parties` initial merger agreement provided that each party could unilaterally extend the termination date from the agreed date of 31 January 2017 to 30 April 2017. Either party could terminate the agreement and claim the reverse termination fee if the agreement is not concluded by April 30; However, a party could not terminate the agreement if it breached its own contractual obligations and « directly caused or led to failure » the conclusion of the merger. Question 2. Where can I look at the type of provisions that the Commission has recently requested? All the arguments that Anthem actually put forward in the antitrust proceedings and the mountains of evidence that it presented by definition failed to convince. For logical (if not collateral) reasons, Anthem could not rely on these arguments to demonstrate that another outcome was justified. Instead, it had to refer to a new argument that it was unable to present, or to certain evidence that it was unable to obtain because of Cigna`s infringement, and then show that the new argument or evidence was convincing enough to achieve a different result. Anthem couldn`t do it. The anti-competitive problems associated with the transaction went far beyond overlapping local competition, which could be solved by a modest divestiture, and even if the defence of efficiency was moderately strengthened, this would also not be enough to save the deal. As such, Anthem could not prove, but for causation – but that no injunction would be issued for violating Cigna`s best efforts. Similarly, transactions that present a real risk of cartels and abuse of position generally require the parties and their advisors to exchange documents and information that provide information about the competitive landscape and the internal competitive position of the parties, as well as the views and assessments of lawyers. The exchange of competitively sensitive information is often subject to confidentiality agreements and its own team procedures, where the distribution of the most competitive information is limited to a selected group or external consultants. Own team agreements and protocols protect the parties` business interests by ensuring that competitively sensitive information is not disclosed to employees who would be able to respond to it in the marketplace, while protecting them from allegations of incorrect information exchanged between competitors that may violate Sherman Act Section One.

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