FTC Announces Second Workshop on Merger Remedies

Joe Simons, Director of the Federal Trade Commission's Bureau of Competition, today announced the second scheduled Workshop on Merger Remedies. The workshop, which is being co-hosted by the Antitrust and Trade Regulation Committee of The Association of the Bar of the City of New York, will be held on October 23, 2002, from 12:00 p.m. to 1:30 p.m., at the Association's offices at 42nd West 44th Street, New York.

This series of FTC "brown bag" workshops is designed to solicit information from a broad range of interested parties regarding consent order remedies in merger and acquisition matters. The FTC's staff will moderate, and a number of interested parties already have expressed an interest in speaking. The FTC is interested in hearing substantive suggestions about alternative approaches that might reduce costs to all parties involved, while continuing to meet the agency's law enforcement objectives. The first workshop was held on June 18, 2002, in Washington, D.C.

The FTC is soliciting views from the public on a wide variety of topics, including those detailed below.

What are specific concerns about the process used to identify appropriate relief for potentially anticompetitive mergers, such as: 1) how does the length of the remedy negotiation and timing of the divestiture affect the original acquisition?; 2) how does the process affect negotiations with potential purchasers of the divested assets and third parties with rights related to, or in, the assets?; and 3) how does the process affect the ability of parties to maintain their ongoing operations, including the retention of key personnel?

How should the Commission address uncertainties raised by certain divestiture proposals, such as: 1) how do "mix-and-match" proposals affect the competitive viability of the divestiture remedy?; 2) how should the Commission take account of the potential deterioration of assets pending their divestiture?; 3) how do ongoing relationships between the merged firm and the divestee affect the likelihood that a divestiture will maintain or restore competition?; and 4) under what conditions should the Commission accept the divestiture of something less than an ongoing business? How does the use of crown jewels, up-front buyers, monitor trustees, and orders to hold separate and maintain assets address these uncertainties? What are the characteristics of an ongoing business that minimize the risks of accepting such a divestiture? Are there specific provisions that should be included in consent orders and purchase agreements between the seller and buyer of the divested assets? How should the Commission address issues that arise when intellectual property is to be divested, such as: 1) how do regulatory and legal restrictions affect the parties' ability to negotiate patent transfers and licenses, and how does this affect the scope of the relief the Commission should seek?; 2) how does the Commission determine the proper scope of the license?; and 3) are significant concerns raised by the licensor's continuing rights in the license, and how can the Commission best ameliorate those concerns?

How should the Commission take account of the proposed buyer's incentives and objectives, when they differ from those of the Commission, such as: 1) should the FTC prefer certain types of buyers in certain circumstances?; 2) how much scrutiny of the proposed buyer, including its financial condition, should the Commission undertake?; and 3) how should the Commission evaluate the proposed buyer's business plan and its ability to implement this plan?

Additional Workshop Information

To facilitate the discussion for the remedies workshops, the Bureau of Competition has published a series of "Frequently Asked Questions About Merger Consent Order Provisions". These "FAQs" represent a review of the Commission's actions in the past, and have been compiled from many years of negotiations between the FTC's staff and parties to horizontal mergers.

Interested parties can refer as well to the Commission's March 15 press release, "FTC Initiates Best Practices Analysis for Merger Review Process," and its May 21 release, "FTC Announces First Workshop on Merger Remedies," which contain more detailed information and additional questions for discussion. Previously submitted comments and the transcript from the June 18 workshop are available.

All interested parties are invited to attend the workshop and offer views and comments on these and other merger remedies issues. Anyone wishing to submit advanced written comments regarding the workshop topics may do so at: remedies@ftc.gov.

The workshop is free; however, reservations should be made via e-mail to nyoutreach@ftc.gov or by calling 212-510-6082 by October 21, 2002. Light refreshments will be provided courtesy of the Antitrust and Trade Regulation Committee.