Competition authorities around the globe are coordinating their reviews of cross-border mergers more every year, and that means they want to share information they've received from merging parties -- information typically stamped confidential.
Before stepping down a month ago as acting assistant attorney general, Sharis Pozen had made it a point in public appearances to encourage merging parties to sign waivers allowing the Department of Justice to share confidential information submitted to the DOJ with merger investigators in other countries.
"The level of cooperation around the world has absolutely flourished," Pozen said in remarks before the Brookings Institution on April 23. "That cooperation is facilitated by the signing of waivers. It certainly helps us cooperate more efficiently and effectively. I would think for [merging] parties, having an efficient and effective review on a global basis would be in their interest as well."
Many lawyers are ambivalent about granting waivers. Allowing governments to share information they would otherwise have to keep to themselves might make a review more efficient, but might make regulators more efficient as well as they mount a merger challenge.
"Everybody hates giving those waivers, but my impression is more people grant them than don't," says John Briggs, co-chair of the antitrust group at Axinn, Veltrop & Harkrider LLP. "That's because they feel they have no choice. Companies want points for cooperating with the antitrust regulators, and they are afraid they will lose them if they don't."
Briggs has granted waivers "plenty of times," generally when he thinks it won't hurt or may even help clients get merger approval. Briggs says most mergers benefit little from collaboration because they raise different competitive issues from country to country due to differences in markets and their participants.
"Some markets have a few global players like petrochemicals, but in a lot of cases they are not going to be the same in each country, and there will be different issues that regulators in each country will have to look at themselves," says Briggs.
One risk for merging parties is that shared information will spark interest in something one country might have overlooked. "A waiver guarantees that another country will get information they might not otherwise have gotten, and then they might develop an interest in additional issues," Briggs says.
Deborah Feinstein, head of Arnold & Porter LLP's U.S. antitrust practice, agrees that waivers don't streamline reviews as much as regulators contend.
"Different agencies can't completely align their reviews as a result of waivers," she says. For instance, it doesn't make sense to file U.S. and European merger notifications at the same time, she says, because the European Commission typically holds prenotification discussions with merging parties, something the Federal Trade Commission and the DOJ generally don't do. "The EC is much farther along in the process by the time filings are made. As a result, regulators in different countries need different pieces of information at different times."
"The timing and nature of the various processes are so different that there's no perfect way to sync the reviews," says Feinstein, who represented Unilever NV/plc in its 2011 acquisition of Chicago-based Alberto Culver Co.
Nevertheless, DOJ officials have credited waivers with speeding up deals, including the Alberto Culver merger, which required approval in the U.S., the U.K., Mexico and South Africa. Cooperation among governments allowed regulators to craft narrow divestiture packages tailored to their immediate markets while still preserving global efficiencies that drew Unilever to the deal.
Another deal aided by waivers was Ticketmaster Entertainment Inc.'s purchase of Live Nation Inc. in January 2010, in which U.S. and Canadian regulators worked out structural and conduct remedies to preserve competition in North American entertainment ticketing.
Pozen assured her Brookings audience that the DOJ is willing to work out terms of each waiver and acknowledged that waivers might not be right for every cross-border deal. But she also said they give regulators greater confidence in discussions with the companies.
"There may be legitimate instances where parties don't want to sign waivers," she said. "But merging parties have tried to whipsaw us by providing some information to one jurisdiction and not to us or vice versa. I want parties to know we're aware of that."
Bill McConnell is The Deal magazine's Washington bureau chief.