Category: Mergers & Acquistions

FTC Announces 2020 Thresholds for Merger Control Filings Under HSR Act and Interlocking Directorates Under the Clayton Act

The Federal Trade Commission (“FTC”) has announced its annual revisions to the dollar jurisdictional thresholds in the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”); the revised thresholds will become effective 30 days after the date of their publication in the Federal Register.  These changes increase the dollar thresholds necessary to trigger the HSR Act’s premerger notification reporting requirements.  The FTC also increased the thresholds for interlocking directorates under Section 8 of the Clayton Act, effective as of January 21, 2020.

Revised HSR Thresholds

Under the HSR Act, parties involved in proposed mergers, acquisitions of voting securities, unincorporated interests or assets, or other business combinations (e.g., joint ventures, exclusive license deals) that meet certain thresholds must report the contemplated transactions to the FTC and the Antitrust Division of the U.S. Department of Justice (“DOJ”) unless an exemption applies.  The parties to a proposed transaction that requires notification under the HSR Act must observe a statutorily prescribed waiting period (generally 30 days) before closing.  Under the revised thresholds, transactions valued at $94 million or less are not reportable under the HSR Act.

A transaction closing on or after the date the revised thresholds become effective may be reportable if it meets the following revised criteria:

Size of Transaction Test

The acquiring person will hold, as a result of the transaction, an aggregate total amount of voting securities, unincorporated interests, or assets of the acquired person valued in excess of $376 million;

or

The acquiring person will hold, as a result of the transaction, an aggregate total amount of voting securities, unincorporated interests, or assets of the acquired person valued in excess of $94million but not more than $376 million, and the Size of Person thresholds below are met.

Size of Person Test

One party (including the party’s ultimate parent entity and its controlled subsidiaries) has at least $188 million in total assets or annual sales, and the other has at least $18.8 million in total assets or annual sales. If the acquired party is not “engaged in manufacturing,” and is not controlled by an entity that is, the test applied to the acquired side is annual sales of $188 million or total assets of $18.8 million.

 The full list of the revised thresholds is as follows:

Original Threshold

2019 Threshold

2020 Revised Threshold
(Effective 30 days after publication in the Federal Register)

$10 million

$18 million

$18.8 million

$50 million

$90 million

$94 million

$100 million

$180 million

$188 million

$110 million

$198  million

$206.8 million

$200 million

$359.9 million

$376 million

$500 million

$899.8 million

$940.1 million

$1 billion

$1,799.5 million

$1,880.2 million

The filing fees for reportable transactions have not changed, but the transaction value ranges to which they apply have been adjusted as follows:

Filing Fee

Revised Size of Transaction Thresholds

$45,000

For transactions valued in excess of $94 million but less than $188 million

$125,000

For transactions valued at $188 million or greater but less than $940.1 million

$280,000

For transactions valued at $940.1 million or more

Note that the HSR dollar thresholds are only part of the analysis to determine whether a particular transaction must be reported to the FTC and DOJ.  Failure to notify the FTC and DOJ under the HSR Act remains subject to a statutory penalty of up to $43,280 per day of noncompliance.

Revised Thresholds for Interlocking Directorates

Section 8 of the Clayton Act prohibits one person from simultaneously serving as an officer or director of two corporations if: (1) the “interlocked” corporations each have combined capital, surplus, and undivided profits of more than $38,204,000 (up from $36,564,000); (2) each corporation is engaged in whole or in part in commerce; and (3) the corporations are “by virtue of their business and location of operation, competitors, so that the elimination of competition by agreement between them would constitute a violation of any of the antitrust laws.”1

Section 8 provides several exemptions from the prohibition on interlocks for arrangements where the competitive overlaps “are too small to have competitive significance in the vast majority of situations.”2  After the revised thresholds take effect, a corporate interlock does not violate the statute if: (1) the competitive sales of either corporation are less than $3,820,400 (up from $3,656,400); (2) the competitive sales of either corporation are less than 2 percent of that corporation’s total sales; or (3) the competitive sales of each corporation are less than 4 percent of that corporation’s total sales.

The revised dollar thresholds for interlocking directorates of $38,204,000 and $3,820,400 will be effective upon publication in the Federal Register; there is no 30-day delay as there is for the HSR thresholds.

1   15 U.S.C. § 19(a)(1)(B).

2   S. Rep. No. 101-286, at 5-6 (1990), reprinted in 1990 U.S.C.C.A.N. 4100, 4103-04.

© Copyright 2020 Cadwalader, Wickersham & Taft LLP

ARTICLE BY Joel Mitnick and Ngoc Pham Hulbig of Cadwalader, Wickersham & Taft LLP.
For more on Hart-Scott-Rodino thresholds, see the National Law Review Antitrust Law and Trade Regulation section.

Spurned by HP Board of Directors, Xerox Gets Hostile, and is Spurned Again

Case raises a unique antitrust question.

Copy equipment giant HP Inc. turned down the much smaller Xerox Holdings Corp.’s acquisition overtures twice in one week as the exchange of statements between corporate leadership grows increasingly hostile. From an anticompetition perspective, the case raises the interesting question of how the “failing firm” defense could come into play.

A deal would bring together the world’s second largest copier company, HP, a company whose leadership position was once so strong that its very brand name, derived from the word “xerographic” in 1938, became a verb used more often than the word “copy” itself. Xerox is also credited with innovations that brought us tools like the mouse and ethernet networks.

But Xerox, which has long since fallen from the top of the copier industry, was met with a flat-out rejection of its offer to get its mojo back by acquiring HP. Xerox offered HP $17.00 in cash and 0.137 Xerox shares for each HP share or $22 per share, or $27 billion overall. Skeptics wondered whether Xerox could execute such a deal, given it is “only” a $9.2 billion business, a third the size of HP. The skeptics were right. On Nov. 17 the HP Board of Directors informed Xerox that its offer was not in the best interests of shareholders as it “significantly undervalues” the HP business.

In its letter to Xerox Vice Chairman and CEO John Visentin, HP wrote that its board was concerned about the “potential impact of outsized debt levels on the combined company’s stock.” While saying it remained “ready to engage” with Xerox to better understand its business and its thinking around a merger, the HP board rejected the bid unanimously.

“We recognize the potential benefits of consolidation, and we are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox. However,” the HP letter to Visentin continued, “… we have fundamental questions that need to be addressed in our diligence of Xerox. We note the decline of Xerox’s revenue from $10.2 billion to $9.2 billion (on a trailing 12-month basis) since June 2018, which raises significant questions for us regarding the trajectory of your business and future prospects. In addition, we believe it is critical to engage in a rigorous analysis of the achievable synergies from a potential combination. With substantive engagement from Xerox management and access to diligence information on Xerox, we believe that we can quickly evaluate the merits of a potential transaction.”

Xerox had said it could generate $2.3 billion by selling its 25% share in the joint venture, Fuji Xerox Co., Ltd., to FUJIFILM Holdings Corp. In a Nov. 8, 2019, statement, Xerox also said it was selling to a Fuji Xerox affiliate Xerox’s 51% stake in Xerox International Partners, a joint original-equipment-manufacturer venture between Xerox and Fuji Xerox. The companies also agreed to end the $1 billion lawsuit FUJIFILM filed against Xerox after last year’s terminated merger. “Total after-tax proceeds to Xerox from the transactions, which included accrued but unpaid dividends through closing, are approximately $2.3 billion. Xerox expects to use the proceeds opportunistically to pursue accretive M&A in core and adjacent industries, return capital to shareholders and pay down its $554 million December 2019 debt maturity,” according to Xerox.

Xerox did not take HP’s rejection well.

“We were very surprised that HP’s Board of Directors summarily rejected our compelling proposal ….” Xerox CEO Visentin responded, “claiming our offer ‘significantly undervalues’ HP. Frankly, we are confused by this reasoning in that your own financial advisor, Goldman Sachs & Co., set a $14 price target with a ‘sell’ rating for HP’s stock after you announced your restructuring plan on October 3, 2019. Our offer represents a 57% premium to Goldman’s price target and a 29% premium to HP’s 30-day volume weighted average trading price of $17.” Visentin added that the offer was not, as HP said, “highly conditional” or “uncertain.” “There will be NO financing condition to the completion of our acquisition of HP,” the Xerox CEO said.

Xerox gave HP until today (Monday, Nov. 25) to accept the offer, otherwise it would take the case directly to HP’s shareholders. “The overwhelming support our offer will receive from HP shareholders should resolve any further doubts you have regarding the wisdom of swiftly moving forward to complete the transaction,” Visentin said.

But HP didn’t need the whole weekend. Yesterday, on Sunday, Nov. 24, it rejected Xerox again via a letter signed by HP Chairman and CEO Enrique Lores and HP Board Chair Chip Bergh. They repeated that Xerox is undervaluing the company, adding that Xerox did not address HP’s concerns about Xerox’s ability to raise the cash or handle such a substantial debt burden. Lores and Bergh didn’t seem to appreciate Visentin’s attitude, either.

“It is clear in your aggressive words and actions that Xerox is intent on forcing a potential combination on opportunistic terms and without providing adequate information,” the HP leaders wrote. “When we were in private discussions with you in August and September, we repeatedly raised our questions; you failed to address them and instead walked away, choosing to pursue a hostile approach rather than continue down a more productive path. But these fundamental issues have not gone away, and your now-public urgency to accelerate toward a deal, still without addressing these questions, only heightens our concern about your business and prospects. Accordingly, we must have due diligence to determine whether a Xerox combination has any merit.”

And yet, things had seemed to be going so well. In June, Xerox and HP announced they were expanding their relationship. Xerox was to begin sourcing certain products from HP, many of which used Xerox software, and supplying toner for HP for these and other products. These printers use laser printing technology HP acquired from Samsung in 2017. Xerox and HP also agreed to partner in the Device as a Service (DaaS) market. Xerox said it would sell HP PCs and peripherals to its commercial customers under a DaaS model, and HP would make Xerox cloud-based content management available to its commercial PC customers in the United States.

As the HP leaders said, the relationship started to sour at least as early as August.

HP questions Xerox’s resources and innovation.

HP offered additional specifics as to why it didn’t find the deal attractive:

  • Xerox has missed consensus revenue estimates in four of the last five quarters.
  • Xerox’s revenue has fallen from $10.2 billion to $9.2 billion (on a trailing 12-month basis) since June 2018, and this is expected to continue. Xerox management projects revenue declines of 6% in fiscal 2019.
  • Given how much of the Xerox business is based on contractual revenue, HP is concerned about the decline in customer Total Contract Value (TCV) in excess of revenue declines, which suggests Xerox’s revenues may decline even faster in future years. HP noted that the TCV of enterprise signings (including renewals) in 2018 was down 13.9% in constant currency and Xerox’s churn for 2018 was 18%, both data points which Xerox has stopped providing publicly since the end of 2018.
  • After a review of synergies based on public information and the “limited information” Xerox provided, HP said it does not agree with the value of potential synergies. “[I]t appears that your assumptions include significant savings that are already included in each company’s independently announced cost reduction plans,” HP wrote.
  • When Xerox exited the Fujifilm joint venture, Xerox essentially “mortgaged its future for a short-term cash infusion.” HP feels this has “left a sizeable strategic hole” in the Xerox portfolio.
  • HP also took a shot that has to sting the once-heralded leader of innovation. “[W]e have concerns as to the state of Xerox’s technology resources, research and development pipeline, future product programs, and supply continuity and capability.
  • HP said Xerox has not accessed the great potential of the Asia Pacific market.

The ‘failing firm’ defense

What’s intriguing from an antitrust perspective is how the parties might use the “failing firm” defense in a hostile takeover scenario. The failing firm defense argues that a merger that substantially lessens competition is less harmful to competition than one party’s failure and exit from the market. The defense requires a showing that the acquired company cannot meet its financial obligations, would not be able to successfully reorganize in bankruptcy, has been unsuccessful efforts to elicit other reasonable offers, and is succumbing to the only available purchaser.

We would expect to see that defense raised here given the high post-merger market share and years-long decline of both parties. But how will Xerox make the required showing without the cooperation of HP management? And, in this case the acquirer is arguably the greater “failure” risk of the two firms, making this use of a “failing firm” case a rarity, if not a first.

Copier industry landscape.

Xerox’s global annual revenue was at $20.64 billion in 2011, $19.54 billion in 2014, and $9.83 billion in 2018. It’s now a $9.2 billion company, with revenues generated from a combination of services and equipment. In 2016, Xerox services accounted for roughly a third of the company’s global revenue. From 2012 to 2014 services generated more revenue than technology. That flipped in 2015 when service revenue dropped to a third of prior years.

HP’s net revenue from its printing business was at a high of $29.6 billion in 2008. It fell to $18.26 in 2016 and bounced up to $20.8 billion in 2018.

Worldwide, Canon is the market leader, with 24% of the market. HP is close behind with more than 21% of the market. Xerox has been in the low single digits for the past two years. After Canon and HP, market leaders are Brother (11%), Epson (10%), Kyocera (7%), NEC (5.6%), Ricoh (2.5%). Some 18.5% of the market is attributed to “other” companies.

Statistics provided by Statista based on data from IT Candor. Additional statistics from HP and Xerox.

© MoginRubin LLP

ARTICLE BY Dan Mogin and Jennifer M. Oliver of MoginRubin, edited by Tom Hagy.

Five Tips to Mitigate Risk in Cryptocurrency Mergers and Acquisitions

Congratulations!

Your client just closed on the purchase of a cutting-edge, blockchainbased payment processing startup. Before this deal, you had heard of bitcoin and blockchain. But, you had never seen a company that actually accepted payment in bitcoin and other cryptocurrencies. You were a little confused by the whole idea. However, your client liked the prospect of purchasing a company that had dealt in digital assets, so you didn’t think much about it.

Arriving to the office the day after the closing, you open up your computer to learn news of a hack at one of the big bitcoin exchanges. The article explains that hackers had accessed the hot wallets on the exchange and made off with over $150 million in digital assets. News of the hack sent the price of bitcoin tumbling 15% in the four hours following the incident. Other digital assets had plunged even further. The headline jumped out at you because the company that your client just purchased used custodial wallets on the exchange to store a lot of its digital assets.

Five minutes after you finish reading the article, you get a call from your client. Sure enough, a good chunk of the digital assets that your client had just purchased were lost in the hack. To make matters worse, the new company had just lost 5 percent of its book value because of the crashing cryptocurrency market.

Volatility of Digital Assets Means Risk

The world of cryptocurrencies has matured somewhat. But, scenarios like the previous hypothetical above remain a real possibility. Indeed, 15 percent price swings in a matter of hours are still common for cryptocurrencies, also known as digital assets, especially for less established currencies. In addition to big price swings, the digital asset industry continues to face regulatory uncertainty, especially in the United States with the SEC, CFTC, FINRA and other regulators undecided about how exactly to regulate digital assets. Despite the volatility and regulatory ambiguity, for risk hungry participants, the potential for large gains has helped drive an increase in merger activity in the digital asset world during the past two years.

Acquiring or selling a company that deals heavily in digital assets presents a litigation risk. Many of the factors that increase the risk of litigation in mergers or acquisitions in the digital asset industry are outside the control of the parties to a transaction. Deal lawyers try to control for these externalities but, in the new and vibrant realm of companies who deal in cryptocurrencies, those controls can be elusive, which in turn enhances the risk of litigation.

There are, however, ways to minimize the chance of a dispute. The following are a few practical tips for transactional lawyers and litigators to help contain the risks inherent in digital asset M&As.

    • Valuation Methodology: Transaction and litigation counsel should pay close attention to valuation methods used in a digital asset transaction. Cryptocurrencies and digital tokens are new and the methods used to value them may be untested. Different digital assets have different applications, e.g., utility tokens versus value storage tokens, and valuation theories should be tailored to the transaction and assets involved. In light of these unique issues and the attendant risks, transactional lawyers should give particular scrutiny to the valuation formulas to avoid a dispute. Litigators, too, should take note of the valuation methods used since they may be fodder for a dispute. And, of course, litigators should also be aware of the possibility for a Daubert-type challenge of any expert valuation witness that may arise in a subsequent dispute.
    • Earn-Outs/Purchase Price Adjustments: Transactional lawyers should pay special attention to earn-out or purchase price adjustment provisions in a digital asset M&A deal. Valuating digital assets is difficult; thus, inclusion of an earn-out or purchase price adjustment clause might help the parties reach a deal more easily. Given the volatility of digital assets, there is a higher than typical likelihood that the value of the earn-out or purchase price adjustment will also fluctuate substantially. Litigators, in turn, should also be especially cognizant of earn-out and purchase price adjustment provisions. Earn-out provisions can be especially ripe for dispute since the earn-out periods often extend for years after closing. While long earn-out periods might not present problems in more traditional fields, the fast pace of change and high levels of volatility in the digital asset industry mean that long earn-out periods are particularly susceptible to disagreement.
    • Reverse Break Up Fees: Transactional lawyers should consider including a reverse breakup fee or a reverse termination fee. These are fees paid by the buyer if the buyer breaches the governing agreements or is unable to close the transaction. For example, imagine you represent the seller in a deal set to close in three days when news breaks about a lawsuit filed by a state attorney general against a new cryptocurrency company. The enforcement action sends the price of all digital assets plummeting by 20 percent in a matter of hours. Your client still meets all of the closing conditions, but the client’s value, which consists largely of digital assets, has just taken a huge hit and the buyer’s counsel is telling you that her client is going to walk away from the deal unless your client drops the price. A reverse breakup fee will help to lessen the buyer’s willingness to run from the transaction and may also help your client recoup costs incurred in the event the buyer does walk away. Litigators representing a buyer or seller should also pay particular attention to whether the conditions in a breakup fee or reverse breakup fee clause have been satisfied.
  • Heightened Importance of Stock Terms: Transactional lawyers should give extra consideration to the applicable law and venue selection provisions in the deal documents. Some states, e.g., Wyoming, among others, have adopted more crypto-friendly regulatory regimes than other states. Consequently, transaction lawyers should consider the pros and cons of each viable state law. And, corporate attorneys should consider obtaining review of deal documents by experienced cryptocurrency litigators who can help position the transaction as best as possible in case of future litigation.
  • Last, transaction lawyers should consider the appropriateness of a mandatory arbitration provision. Arbitration has its drawbacks, e.g., the cost of the arbitrator, absence of clear rules for discovery, restricted appeal rights, etc., but the benefits of arbitration may be particularly helpful when dealing with a digital asset M&A dispute. For example, the parties can make their proceedings confidential, which can avoid the disclosure of trade secrets or other proprietary information in public court proceedings. Further, in the highly technical field of cryptocurrencies, the parties have greater latitude to ensure that the proceeding is adjudicated by an arbitrator with pertinent knowledge of and/or experience in digital assets or blockchain technology.

Of course, the foregoing is not an exhaustive list of the ways to reduce risk in digital asset M&A deals. Other terms and conditions in the transaction contracts for a digital asset M&A deal should not escape scrutiny. Representations and warranties, contract exhibits and schedules should be tailored to the deal and the nature of digital assets in play. Due diligence is also an especially important component of risk mitigation since the nature of digital assets makes for a more difficult diligence process than a traditional transaction. Regardless of which contractual provisions are used, litigators and transactional lawyers should both be aware of and understand the heightened risk of a dispute in the volatile world of cryptocurrencies and digital assets.

© Polsinelli PC, Polsinelli LLP in California

ARTICLE BY Thomas H. Wagner of Polsinelli PC.
For more on cryptocurrency, see the Financial Institutions & Banking law page on the National Law Review.

Colleges, Students Tell DOJ McGraw-Hill/Cengage Merger Would Create a Textbook Duopoly

Two of the three dominant college textbook publishers – McGraw-Hill Education, Inc. and Cengage Learning Holdings II, Inc – have agreed to merge, creating a virtual duopoly in the college textbook market and setting the stage for a potential antitrust fight with the Antitrust Division of the U.S. Department of Justice. McGraw-Hill and Cengage claim the new company will generate global growth, improve margins, and produce efficiencies that will lead to more affordable education materials for students.

But several student and consumer groups disagree, arguing the merger will lead to decreased competition and higher prices for college textbooks. They also claim the post-merger entity will implement digital strategies (e.g., all-access digital subscriptions) that will: (1) force smaller competitors out of the market; (2) eliminate the secondary textbook market, which provides students a lower cost option for purchasing or renting textbooks; and (3) allow the two dominant publishers to collect and monopolize certain types of student data, including data showing students’ learning styles, students’ understanding of core concepts, students’ need additional assistance, and/or students’ risk of dropping out.

The Scholarly Publishing and Academic Resources Coalition (SPARC) has been one of the loudest critics of the merger. On August 14, 2019, SPARC sent a letter to the DOJ urging it to block the merger, arguing that it will “significantly decrease competition in a market already rife with anti-consumer behavior.”

In its section titled “The Textbook Market is Broken,” SPARC explains that college textbooks are sold in a “captive market” because students are forced to purchase the materials selected by their professors. This system “effectively hands the three major companies who currently dominate the market a blank check to develop expensive materials without regarding the preferences, needs, or financial circumstances of students. The textbook industry’s current state of dysfunction results from years of consolidation, unsustainable practices, and lack of price competition.” SPARC points to textbook pricing as an example of this dysfunction, as prices “have increased 184% over the last two decades — three times the rate of inflation.”

In a separate letter sent to the DOJ at the end of July, U.S. PIRG Education and student leaders from colleges across the country raised similar concerns. Specifically, the students explain they have “directly felt the impacts of skyrocketing textbook prices, further exacerbated by Cengage and McGraw-Hill’s efforts to remove cost-cutting options for students by undermining used book markets,” and that “[t]o maintain profit margins, publishers have put out custom or frequent new editions to make it difficult to find a used book for our classes ….” Citing a rather shocking statistic, the students claimed that “65% of students have skipped buying a book at some point in their college career because of cost despite 94% of them knowing it would hurt their grade.”

The students also identified several specific harms caused by “innovative” digital models employed in the textbook industry:

  • The publishers issue expiring access codes to paid online platforms that students must also use to submit homework and test answers, destroying the used book market;
  • Students cannot sell their materials at the end of the course or keep them or future reference, harming students who already cannot afford books;
  • Automatic billing or so-called “inclusive access” means that students are automatically charged for materials, eliminating their ability to price shop; and
  • Based on contracts proposed at some schools, publishers will continue to raise prices at the same rate that has led to the current affordability crisis.

The potential anticompetitive impacts of this merger are obvious and significant. Assuming the relevant market is the U.S. college textbook market, the merger is between two entities that each control more than 20% of an already highly concentrated market. Under relevant case law and the DOJ’s/FTC’s Horizontal Merger Guidelines, the merger presumptively increases market power for the post-merger entity and violates Section 7 of the Clayton Act. Moreover, the merging entities have made clear they intend to develop an all-access digital subscription service that, if adopted en masse, will likely eliminate both smaller competitors and the secondary market for college textbooks. Finally, by creating a virtual duopoly, the merger increases the likelihood of coordination among rivals. Considering these issues, the DOJ must take a very close look at this merger and implement conditions that address these issues if the merger is approved.

© MoginRubin LLP

ARTICLE BY Timothy Z. LaComb of MoginRubin.
Edited by Tom Hagy for MoginRubin LLP

2016 Year In Review: Corporate Governance Litigation and Regulation

2016 year in review2016 saw many notable developments in corporate governance litigation and related regulatory developments.  In this article, we discuss significant judicial and regulatory developments in the following areas:

  • Mergers and Acquisitions (“M&A”): 2016 was a particularly significant year in M&A litigation.  In Delaware, courts issued important decisions that impose enhanced scrutiny on disclosure-only M&A settlements; confirm the application of the business judgment rule to mergers approved by a fully informed, disinterested, non-coerced shareholder vote; inform the proper composition of special litigation committees; define financial advisors’ liability for breaches of fiduciary duty by their clients; and offer additional guidance for calculating fair value in appraisal proceedings.

  • Controlling Shareholders: Delaware courts issued important decisions clarifying when a person with less than majority stock ownership qualifies as a controller, when a shareholder may bring a quasi-appraisal action in a controlling shareholder going-private merger, and when the business judgment rule applies to controlling shareholder transactions. In New York, the Court of Appeals followed Delaware’s guidance as to when the business judgment rule applies to a controlling shareholder squeeze-out merger.

  • Indemnification and Jurisdiction: Delaware courts issued decisions clarifying which employees qualify as officers for the purpose of indemnification and articulating an updated standard for exercising jurisdiction in Delaware over actions based on conduct undertaken by foreign corporations outside of the state.

  • Shareholder Activism and Proxy Access: Shareholder activists remained busy in 2016, including mounting successful campaigns to replace CEOs and board members at Chipotle and Hertz. Additionally, the SEC’s new interpretation of Rule 14a-8 has limited the ability of management to exclude a shareholder proposal from a proxy statement on the grounds that it conflicts with a management proposal.  Also, some companies have adopted “proxy rights” bylaws, which codify a shareholder’s right to directly nominate board members.

I.  M&A

A.Enhanced Scrutiny of Disclosure-Only Settlements

In January 2016, the Delaware Court of Chancery issued an important decision, In re Trulia, Inc. Stockholder Litigation,1 making clear the court’s renewed scrutiny of—and skepticism towards—so-called disclosure-only settlements of shareholder class actions. In Trulia, shareholders sought to block the merger of real estate websites Zillow and Trulia.  After litigation was commenced, the parties agreed to a settlement in which Trulia would make additional disclosures in proxy materials seeking shareholder approval of the transaction in exchange for a broad release of present and future claims by the class and fees for plaintiffs’ counsel.

Chancellor Bouchard rejected the proposed settlement and criticized disclosure-only settlements as generally unfair to shareholders.  Chancellor Bouchard noted that the Court of Chancery had previously expressed concerns regarding the incentives of plaintiff counsel to settle class action claims in which broad releases were granted in exchange “for a peppercorn and a fee”—i.e., for fees and immaterial disclosures that provided little benefit to shareholders.2  According to the Court, “these settlements rarely yield genuine benefits for stockholders and threaten the loss of potentially valuable claims that have not been investigated with vigor.”3

Continue reading at the National Law Review…

ARTICLE BY Nathan Bull, Alejandra Contreras, Jaclyn A. Hall, Jason M. Halper, Hyungjoo Han & Adam Magid of Cadwalader, Wickersham & Taft LLP
© Copyright 2017 Cadwalader, Wickersham & Taft LLP

Cybersecurity Due Diligence Is Crucial in All M&A—Including Energy M&A Transactions

Can a single data breach kill or sideline a deal? Perhaps so. Last month Verizon signaled that Yahoo!’s disclosure of a 2014 cyberattack might be a “material” change to its July $4.83 billion takeover bid—which could lead Verizon to renegotiate or even drop the deal entirely. Concern over cybersecurity issues is not unique to technology or telecommunications combinations. In a 2016 NYSE Governance Services survey of public company directors and officers, only 26% of respondents would consider acquiring a company that recently suffered a high-profile data breach—while 85% of respondents claimed that it was “very” or “somewhat” likely that a major security vulnerability would affect a merger or acquisition under their watch (e.g., 52% said it would significantly lower valuation).

Bottom Line: Cybersecurity should play a more meaningful role in the due diligence portion of any potential M&A deal. Certainly this is so when a material portion of the value in the acquisition comes from intangible assets that might be most vulnerable to hackers. Financial information comes to mind. Personal information of employees does as well. But companies also need to be concerned about their trade secrets, know-how and other confidential business information whose value inheres in its secrecy. Therefore, a merely perfunctory approach to cybersecurity can become very costly. The union of companies today is a union of information, malware and all.

Energy M&A Is Not Immune

To weather the plunge in prices, many oil companies have sought out new innovations to reduce the cost of extraction and exploration. Investments in digital technologies will likely only increase—a 2015 Microsoft and Accenture survey of oil and gas industry professionals found that “Big Data” and the “Industrial Internet of Things” (IIoT) are targets for greater spend in the next three to five years. Cybersecurity threats were perceived in the survey as one of the top two barriers to realizing value from these technologies.

These developments in energy industry—bigger data and bigger vulnerabilities—are here to stay. The proposed merger of General Electric and Baker Hughes also speaks to the growing importance of analytics to oil production. Commentators note that the acquisition would allow GE more fully to implement its Predix platform, an application of IIoT to connect everything from wellhead sensors to spreadsheets. However, as last month’s massive cyberattack on DNS provider Dyn, Inc. demonstrated, the IIoT holds unique challenges as well as great promise for operational efficiency. (In this attack, reportedly 400,000 internet-linked gadgets were hacked and used to reroute web traffic to overload servers.)

Bottom Line: Robust cybersecurity diligence should be de rigueur for energy M&A.

What Can Companies Do to Protect Deal Value?

For starters, energy companies should treat cybersecurity as a separate and more involved category for due diligence.

Liability for or damages from legacy data breaches or malware can become expensive—damages to systems, theft of information and liability from the release of personal or reputation-damaging information, to name a few. Therefore, anticipating problems post-merger, cataloguing past vulnerabilities and most importantly, discovering actual breaches before closing is crucial to avoid deals blowing hot and cold.

Companies should retain IT specialists who can do an objective assessment of the cybersecurity posture of a proposed merger or acquisition. This can help prospective acquirers better determine the adequacy of a target’s cybersecurity programs, such as its policies over incident response, how access to data is distributed, the extent of a company’s online presence and vulnerabilities, and how remediation of any potential cyberthreats or actual breaches may best proceed.

A cybersecurity questionnaire should also be developed, covering such topics as:

  • How and where has company data been stored?

  • Who has had access?

  • Have there been any actual or attempted intrusions into (or leaks) of company data?

An acquirer could further insist on specific representations and warranties from a target company regarding their cybersecurity compliance, as well as bargain towards indemnity for prior data breaches.

On the target side, energy companies should prepare (in turn) for more scrutiny over their data security and privacy practices. Among other benefits to “knowing thyself,” getting ahead of this process should offer targeted companies a better negotiating position. It would also allow them to take a more proactive role in defining the policies of the combined company post-merger. At the very least, these efforts could help avoid the kind of hiccups and uncertainties that lead to undervaluation. In any event, poor cybersecurity practices can give an impression that a target lacks risk management in other areas—not an ideal pose to strike in any bargain.

Parting Thoughts

It is a trope in cybersecurity writing to invoke figures like Sun Tzu and shoehorn in quotes about war stratagem. Well, these habits are in some ways unavoidable: For all intents and purposes, fighting anonymous hackers resembles battle prep—a method of self-awareness and readiness that defies box-checking.

Energy companies could take these words to heart from the inestimable Miyamoto Musashi, a samurai who won 60 duels: “If you consciously try to thwart opponents, you are already late.” (A sentiment echoed more recently by Mike Tyson’s truistic “Everyone has a plan until they get punched in the mouth.”)

And This Key Takeaway: Any cybersecurity program must go hand-in-hand with a corporate culture that respects data as among its most valued assets. Efforts in detection, reporting and remediation are challenges that fall throughout the ranks and, if reflexive to the unknown, stand the best chance of being fully realized.

Bottom Line: Mind Your Data!

ARTICLE BY Jeff C. Dodd, Douglas W. Rommelmann & Ross Campbell of Andrews Kurth Kenyon
© 2016 Andrews Kurth Kenyon LLP

Microsoft Acquiring LinkedIn as Move into Enterprise Social Media

Linkedin MicrosoftMicrosoft has announced that it is buying LinkedIn for $26.2 billion, one of the largest tech acquisitions in history, and that it intends to use the business social media giant to put Microsoft at the center of our work lives.

Currently, LinkedIn has 433 million members in 200 countries. Microsoft has 1.28 billion Office users worldwide. Microsoft CEO Satya Nadella said in an interview with Bloomberg:

“This is about the coming together of the leading professional cloud and the leading professional network. This is the logical next step to take. We believe we can accelerate that by making LinkedIn the social fabric for all of Office.”

Nadella said that Microsoft’s vision is to place your LinkedIn profile at the center of your online work life, connecting it with Windows, Outlook, Skype, PowerPoint and other Microsoft products.

For example, Cortana (Microsoft’s digital assistant) could provide users with information on other participants in an upcoming meeting by pulling data from LinkedIn profiles. Members working on a project could pull up LinkedIn articles concerning their project or use LinkedIn profiles to search for an “expert” to help with the project.

Microsoft also sees LinkedIn playing a major role in developing a new customer relationship management (CRM) tool for sales organizations. LinkedIn analytics could be integrated with Microsoft’s Dynamics tool, which competes with Salesforce.com, to assist companies with managing their customers.

Here’s a CNBC interview with Nadella and LinkedIn CEO Jeff Weiner explaining the opportunities.

ARTICLE BY Stephen Fairley of The Rainmaker Institute

© The Rainmaker Institute, All Rights Reserved

U.S. Sentencing Commission Weighing Recommendation to Increase Criminal Antitrust Penalties

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In June, the United States Sentencing Commission, which is appointed by the President to make recommendations to Congress on the criminal penalties for the violation of federal law, issued a request for comments regarding whether the guidelines for calculating antitrust fines should be modified. Currently, corporate fines for cartel price fixing are calculated on a sliding scale, tied to the amount of the “overcharge” imposed by the violators, with the standard maximum fine under the Guidelines for a corporation capped at $100 million and, for an individual, capped at $1 million. The deadline for such comments was July 29, and the views expressed on the issue varied considerably.

Contending that the current Guidelines do not provide an adequate deterrent to antitrust violations, the American Antitrust Institute urged the Commission to recommend an increase in the fines for cartel behavior. The AAI stated that the presumption in the Guidelines that antitrust cartels, on average, “overcharge” consumers for goods by 10% is greatly understated, and thus should be corrected to reflect more accurate levels. Pointing to economic studies and cartel verdicts, the AAI suggests that the median cartel “overcharge” is actually in excess of 20%, and therefore the presumption should be modified in the Guidelines. If adopted, the AAI’s proposal would double the recommended fines under the Guidelines for antitrust violations.

Perhaps surprisingly, the DOJ responded to the Commission’s Notice by stating that it believes that the current fines are sufficient, and that no increase in antitrust fines is warranted at this time. The DOJ indicated that the 10% overcharge presumption provides a “predictable, uniform methodology” for the calculation of fines in most cases, and noted that the Guidelines already permit the DOJ to exceed the fine levels calculated using the 10% overcharge presumption in some circumstances. Specifically, the DOJ noted that the alternative sentencing provisions of 18 USC 3571 already permit it to sidestep the standard guidelines and seek double the gain or loss from the violation where appropriate. Notably, the DOJ utilized this provision in seeking a $1 billion fine from AU Optronics in a 2012 action, although the court declined the request, characterizing it as “excessive”. The court did, however, impose a $500 million fine, an amount well in excess of the cap under the standard antitrust fine guidelines.

Finally, D.C. Circuit Court of Appeals Judge Douglas Ginsburg and FTC Commissioner Joshua Wright offered a completely different view on the issue in comments that they submitted to the Sentencing Commission. Suggesting that fines imposed on corporations seem to have little deterrent effect, regardless of amount, they encouraged the Commission to instead recommend an increase in the individual criminal penalty provisions for antitrust violations. Notably, they encouraged the Commission not only to consider recommending an increase in the fines to which an individual might be subjected (currently capped at $1 million), but also to recommend an increase in the prescribed range of jail sentences for such conduct (which currently permit for imprisonment of up to 10 years).

The Commission will now weigh these comments and ultimately submit its recommendations to Congress by next May. If any changes are adopted by Congress, they would likely go into effect later next year. Stay tuned.

ARTICLE BY

James M. Burns
 
OF 
Dickinson Wright PLLC

The Real Tax Benefits of Inverting to Canada

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On August 26, Burger King announced that it entered into an agreement to acquire Tim Hortons, Inc., the Canadian coffee-and-doughnut chain, in a transaction that will be structured as an “inversion” (i.e., Burger King will become a subsidiary of a Canadian parent corporation).  The deal is expected to close in 2014 or 2015. The agreement values Tim Hortons at approximately $11 billion, which represents a 30 percent premium over Tim Hortons’ August 22 closing stock price.

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Under the terms of the deal, Tim Hortons shareholders will receive a combination of cash and common shares in the new company. Each common share of Burger King will be converted into 0.99 of a share of the new parent company and 0.01 of a unit of a newly formed, Ontario-based limited partnership controlled by the new parent company. Holders of shares of Burger King common stock, however, will be given the right to elect to receive only partnership units in lieu of common shares of the new parent company, subject to a limit on the maximum number of partnership units issued.  Burger King shareholders who make this election will be able to defer paying tax on the built-in gain in their Burger King shares until the partnership units are sold. 3G Capital, Burger King’s principal shareholder, has elected to receive only partnership units. 3G will own approximately 51 percent of the new Burger King-Tim Hortons company, with current public shareholders of Burger King and Tim Hortons receiving 27 percent and 22 percent, respectively.

Inversions have gotten plenty of negative publicity during the past few years.  Most of the reported deals involve U.S. companies that have acquired smaller foreign companies in low tax jurisdictions such as Ireland, Switzerland, and the U.K.  As with any inversion transaction, the U.S. company will continue to be subject to U.S. federal income tax on its worldwide income.  The U.S. company will benefit, however, from the ability to: (i) reorganize its controlled foreign subsidiaries under a new foreign parent corporation (thereby removing those subsidiaries from the U.S. “controlled foreign corporation” regime and also allowing for the future repatriation of non-U.S. source profits to the foreign parent corporation and avoid U.S. corporate income tax); and (ii) “base erode” the U.S. company with intercompany debt and/or license arrangements with the new foreign parent or its non-U.S. subsidiaries.

It has been reported that Burger King’s effective tax rate was 27.5 percent in 2013 and Tim Hortons was 26.8 percent (15 percent federal rate plus 11.8 percent provincial rate), so “base eroding” Burger King with deductible interest and/or royalty payments to Canada will not provide a significant tax benefit to Burger King.  Where the use of a Canadian parent corporation, however, will benefit Burger King (and other U.S. companies that have inverted into Canada) from a tax perspective is the ability to take advantage of Canada’s (i) “exempt surplus” regime, which allows for the repatriation of dividends from foreign subsidiaries into Canada on a tax-free basis; and (ii) income tax treaties that contain tax sparing provisions, granting foreign tax credits at rates higher than the actual foreign taxes paid.  The United States does not provide either of these tax benefits under its corporate income tax system or treaty network. 

Canadian Exempt Surplus Regime

In general, under Canadian law, dividends received by a Canadian corporation out of the “exempt surplus” of a foreign subsidiary are not subject to corporate income tax in Canada.  Exempt surplus includes earnings of a foreign subsidiary that is resident in, and carrying on an active business in, a country with which Canada has concluded an income tax treaty or, more recently, a tax information exchange agreement (TIEA).  A TIEA is an agreement between two jurisdictions pursuant to which the jurisdictions may request and share certain information that is relevant to the determination, assessment and collection of taxes, the recovery and enforcement of tax claims, and the investigation or prosecution of tax matters.  The extension of the exempt surplus regime to jurisdictions that have signed TIEAs (but not income tax treaties) with Canada is significant because Canada has signed such agreements with low-tax jurisdictions, such as the Cayman Islands, Bermuda, and the Bahamas. Historically, the use of a Barbados IBC, which has a maximum corporate income tax rate of 2.5 percent, was the preferred jurisdiction for a Canadian parent company operating in a low-tax jurisdiction because of the long standing Canada-Barbados income tax treaty.

On the other hand, dividends received by a Canadian corporation out of the “taxable surplus” of a foreign subsidiary will be taxable in Canada (subject to a grossed-up deduction for foreign taxes) at regular corporate income tax rates. Taxable surplus includes most types of passive income, such as royalties, interest, etc., and active business income of a foreign subsidiary that is resident in, or carrying on business in, a country with which Canada has neither an income tax treaty nor a TIEA.  Special rules may deem certain passive income (such as interest or royalties) to be included in exempt surplus if received by a foreign subsidiary resident in a tax treaty or TIEA jurisdiction, if those amounts are deductible in computing the exempt earnings of another foreign subsidiary.  For example, interest and royalties paid from an active business of a U.K. subsidiary of a Canadian parent corporation to a Cayman Islands subsidiary of such Canadian parent will be eligible to be repatriated to Canada from the Cayman Islands under the exempt surplus regime on a tax-free basis.

It is interesting to note, however, that Burger King will not be able to repatriate most of its foreign-source income to Canada on a tax-free basis under the exempt surplus rules.  The majority of Burger King’s foreign-source income consists of royalties and franchise fees, which will be considered passive income for Canadian income tax purposes.  (Burger King, which operates in about 14,000 locations in nearly 100 countries, has become a franchiser that collects royalty fees from its franchisees, not an operator of restaurants).

Canada’s Tax Sparing Provisions

Another tax benefit offered by a Canadian parent corporation is the ability to utilize the “tax sparing” provisions contained in many Canadian income tax treaties. Canada currently has income tax treaties that contain tax sparing provisions with more than 30 countries, including Argentina, Brazil, China, Israel, Singapore, and Spain. In general, the purpose of a tax spari
ng provision is to preserve certain tax incentives granted by a developing jurisdiction by requiring the other jurisdiction to give a foreign tax credit for the taxes that would have been paid to the developing country had the tax incentive not been granted.  For example, under Article 22 of the Canada-Brazil income tax treaty, dividends paid by a Brazilian company to a Canadian parent corporation are deemed to have been subject to a 25 percent withholding tax in Brazil and therefore, eligible for a 25 percent foreign tax credit in Canada, even though the treaty limits the withholding tax to 15 percent (and in actuality, Brazil does not even impose withholding taxes on dividends under its local law).  A similar benefit is available for interest and royalties paid from Brazil to Canada (e.g., a deemed withholding tax, and therefore foreign tax credit, of 20 percent, even though the treaty caps the withholding tax at 15 percent).  As noted above, the United States does not currently have any income tax treaties that contain tax sparing provisions.

Conclusion

With Burger King’s effective corporate tax rate of 27.5 percent in the United States in 2013 and Tim Hortons 26.8 percent in Canada, the tax benefits of Burger King inverting to Canada are not readily apparent.  Notwithstanding the lack of a significant disparity in these tax rates, Canada does offer the ability to exclude from its corporate income tax dividends received from the earnings of a foreign subsidiary that is resident in, and carrying on an active business in, a jurisdiction that has concluded an income tax treaty or TIEA with Canada.  This key benefit, along with the Canadian income tax treaties that contain tax sparing provisions, provides one more example of why U.S. multinationals are operating at a competitive disadvantage when compared to other OECD countries around the world. 

ARTICLE BY

Jeffrey L. Rubinger
 
OF 
Bilzin Sumberg Baena Price & Axelrod LLP

Sizing Up the Competition: Antitrust Enforcement and the Bazaarvoice Ruling

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High-profile or highly profitable firms are no longer the sole targets of post-merger divestitures by antitrust enforcers. Today, firms that have little or no revenues, including some that operate in emergent industries with little or negative profits, also find themselves subject to merger inquiries, as demonstrated by the recent merger review of Bazaarvoice’s 2012 non-reportable $160 million acquisition of PowerReviews. 

Bazaarvoice merger antitrust

These competing firms were both operating at a loss in the relatively small Ratings and Review (R&R) market. Yet, the nature of competition in the industry and the industry’s potential importance to adjacent industries – combined with statements by the acquirer’s executives prior to the transaction – attracted the scrutiny of antitrust enforcers. Ultimately, Bazaarvoice agreed to divest all of its PowerReviews assets, including employees and client base, to a small competitor, Viewpoints – which had initially entered R&R space by building a solution for Sears – for $30 million.  

This article considers the economic arguments and evidence used by the court to reach its decision in United States v. Bazaarvoice.

Background

R&R platforms offer an online interface for customer reviews of different products, which can help to drive sales, increase product visibility, and offer valuable information on customers to brands and retailers, allowing brands to respond to customer concerns in real time. Leading platforms offer clients the following services: confirmation of the authenticity of customer reviews; moderation of reviews (e.g., removing offensive language); syndication that combines reviews from multiple retailers to increase the visibility of a product; data on retailers and social media analytics to support marketing; and search engine optimization to drive traffic. Bazaarvoice and PowerReviews offered clients all of these services, but Bazaarvoice generally provided more customizable features at higher price points to larger clients. Bazaarvoice offered human moderation of customer reviews, for example, while PowerReviews offered only automated monitoring.

The Department of Justice (DOJ) applied competitive analysis that ignored more traditional focuses on supracompetitive pricing, high margins, and immediate harm to consumers.

In 2012, Bazaarvoice had 800 employees and revenue of $106.1 million; in 2011, the privately held PowerReviews employed just 80 people and reportedly had revenue of $11.5 million. Although PowerReviews did not publicly report its profitability, according to Bazaarvoice executives, the smaller firm was operating at a loss. Similarly, Bazaarvoice itself reported consistently negative operating margins in 2011–2013 that were no higher than -23%.

At the time of the court ruling (January 2014), actual competition from other platforms in the R&R market was marginal, composed primarily of a handful of start-ups with inferior products or of larger firms that offered complementary products. Direct competitors like Pluck, Gigya, Practical Data, Rating-system.com, and European Reevoo were tiny, with few customers and weak services. More established firms that might have acted as potential competitors, such as Google, Facebook, Oracle, and Salesforce, were more interested in partnering with Bazaarvoice than in competing in the R&R market. Meanwhile, Amazon accounted for 28% of e-commerce revenue and maintained (and still does, as of August 2014) its own R&R platform, which was not available to competing retailers. 

Competitive arguments and evidence 

In its review of the transaction, the U.S. Department of Justice (DOJ) applied competitive analysis that ignored more traditional focuses on supracompetitive pricing, high margins, and immediate harm to consumers. The analysis focused instead on the nature of competition in the R&R industry, including barriers to entry and the anticompetitive potential for long-run harm to consumers as detailed in the assessments of Bazaarvoice senior staff.

Low margins: The parties were losing money. Their profits were a far cry from the supracompetitive profits often associated with companies targeted by antitrust litigation. In previous antitrust cases against Microsoft, for example, the company’s margins on Windows and MS Office had played a significant role at trial. Similarly, the potential for enhanced market power and exceptional margins contributed to the DOJ decision to prevent Microsoft from acquiring Intuit in 1994–1995.

Barriers to entry: Bazaarvoice’s extensive syndication network, in particular, became a major component of the case. The DOJ argued that it would be extremely difficult for competitors to develop a comparable syndication network of retailers and brands, allowing Bazaarvoice to leverage anticompetitive economies of scale across many important clients. These advantages, combined with the difficulty of switching from one R&R platform to another – as demonstrated by the reluctance of PowerReviews customers to switch to the Bazaarvoice platform – would effectively block new entrants from the market. While the DOJ’s argument was much less convincing with respect to other barriers to entry, such as the company’s technology and reputation, clearly antitrust enforcers had seized on important elements of the relationship between Bazaarvoice’s value proposition and the growth of the R&R market.

Bad documents: These potential anticompetitive implications were explicitly referenced in Bazaarvoice’s own internal documents, which became instrumental in court. The firm’s current CEO remarked that there were “literally, no other competitors” beyond PowerReviews, and the former CEO wrote that after the proposed acquisition of PowerReviews, Bazaarvoice would have “[n]o meaningful direct competitor.” Bazaarvoice senior executives openly acknowledged that syndication networks created high barriers to entry in the R&R industry and clearly described that the elimination of Bazaarvoice’s “primary competitor” would provide “relief from price erosion.” The DOJ seized on these documents, arguing that the merger would increase prices and eliminate the “substantial price discounts” that retailers and manufacturers received as a result of competition between Bazaarvoice and PowerReviews.

Court’s opinion 

In this case, the court noted these apparent competitive weaknesses and remained on the lookout for changes in the R&R market. In fact, in the 18 months from the time of the acquisition on June 12, 2012, until the case’s ultimate outcome on January 8, 2014, the only post-merger evidence that was considered dispositive by the court was
the absence of serious entry to the market. The court explicitly rejected the use of pricing data, suggesting that it could be manipulated. The same pricing data that regulators might have expected to rise above competitive levels – and that therefore could have created space for new entrants in the R&R market at lower price points – was viewed as suspect. The DOJ case was structured instead around the absence of a credible entry threat in the R&R space, despite Bazaarvoice’s annual margins of around -30%. 

For Bazaarvoice, the challenge was less about responding to customer concerns or even to actual prices than it was about addressing the incendiary internal paper trail left by the company’s senior executives.

Discussion 

The court’s focus on the entry threat and its dismissal of pricing policies is curious, because the two issues are highly related. In an industry characterized by prices so low that the market leader is highly unprofitable, new firms have no incentive to enter. To become profitable, Bazaarvoice would have had to double its prices, and yet no evidence presented in the case demonstrated that entry would be impossible at that much higher price level. Surprisingly, the court did not connect these two issues in a meaningful way.

For Bazaarvoice, the challenge was less about responding to customer concerns or even to actual prices than it was about addressing the incendiary internal paper trail left by the company’s senior executives. In fact, as the testifying expert for Bazaarvoice/PowerReviews, Dr. Ramsey Shehadeh, pointed out, customers expressed no reservations about the merger, and Bazaarvoice had not raised prices. Ultimately, the court discounted Bazaarvoice’s arguments related to the absence of actual anticompetitive effects, noting that the firms could moderate their behavior while under antitrust scrutiny and focused instead on the firm’s own internal documents, which had detailed a plan to block competitive pressure. Bazaarvoice found itself fighting its own internal assessment of the competitive effects of the proposed merger, in addition to the DOJ’s economic arguments. The internal documents and emails were far more difficult to explain away than the economic circumstances, resulting in a full divestiture.

ARTICLE BY

Rebecca Kirk Fair
 
OF 
Analysis Group, Inc.