McDermott Will & Emery LLP put together a newsletter entitled
Inside M&A. Their first subject: Improper premerger coordination, or "gun jumping." Washington partners Jon Dubrow and Stefan Meisner explain how to reduce the risk of being accused of the practice, which is barred by both the Hart-Scott-Rodino Act and Section 1 of the Sherman Act.
They say merging parties should consult with counsel early in the process to establish antitrust guidelines that govern all integration planning and related preclosing activities. The Deal's
Bill McConnell writes that the gun-jumping ban is intended to keep the companies as fully separate competitors while an antitrust review is underway. He cites Qualcomm Inc. as an example of what not to do; the Department of Justice dinged Qualcomm for nearly $2 million for jumping the gun on its acquisition of Flarion Technologies Inc.
McDermott's newsletter offers some key principles:
- Avoid improper information exchange during due diligence and transition planning.
- Minimize coordination on significant preclosing projects or contracts.
- All preclosing conduct covenants in any merger or acquisition
agreement must be reviewed to ensure that they comply with applicable
antitrust rules.
- Merging parties should seek, whenever possible, to minimize the
time that elapses between execution of a merger agreement and the
closing of the transaction.
- Joint marketing of the transaction is permissible accompanied
by strict guidelines that ensure independent ongoing competition until
the transaction closes.
The newsletter also contains articles on special purpose acquisition companies, or SPACs, and the German Securities Trading Act Notice requirements following M&A transactions. -
Baz Hiralal
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