Antitrust

S H E A R M A N & S T E R L I N G L L P | 3 1 These cases are a reminder that regardless of the thresholds for HSR pre-merger notifications — there is no de minimis exception to the antitrust laws that would allow a deal to avoid antitrust scrutiny simply because it fell below the pre-merger notification threshold. When a nonreportable merger is likely to raise significant antitrust concerns or be subject to significant customer complaints, the parties should consider the risk of challenge and whether that risk can be mitigated effectively by bringing the merger to the agencies' attention before closing. UNITED KINGDOM AND AUSTRALIA In the U.K. — and this is expected to remain post-Brexit — merger filings are done voluntarily. However, where the parties decide not to notify, they risk that the Competition and Markets Authority (CMA), within the four-month period following a transaction becoming public, will refer the merger for a Phase II review. Should that happen, an adverse report could follow, requiring divestment or other remedies. In some cases, where a merger is completed at the time of notification or while the review is in progress, the remedy imposed may require unwinding the deal. This is what happened in 2016, when the CMA ruled against Intercontinental Exchange's (ICE) 2015 buyout of Trayport. The CMA concluded that the merger would result in substantially lessened competition in the supply of trade- execution services and trade clearing services to energy traders. Specifically, the CMA found that ICE could use its ownership of Trayport's trading platform to reduce competition between itself and rivals in wholesale energy trading. The CMA found that ICE's divestiture of Trayport was the only effective remedy. This case is the first vertical merger since the CMA's 2014 formation that resulted in a full divestiture order in the U.K. It demonstrates that the risk of an acquisition being blocked does exist, even when pre-merger notification is voluntary. Similar examples exist in other jurisdictions where merger notification is voluntary. The Australian Competition & Consumer Commission (ACCC), for example, in July 2018, blocked the proposed acquisitions of Aurizon's Queensland intermodal business and its Acacia Ridge Terminal by Pacific National. In face of ACCC opposition the Queensland intermodal business transaction fell through, with the asset ultimately acquired by Linfox in October 2018. Until the Federal Court removed constraints on the Acacia Ridge Terminal transaction on May 15, 2019, Aurizon had been prevented from closing and had to continue operating its loss-making intermodal freight business. W H E R E A M E R G E R I S C O M P L E T E D A T T H E T I M E O F N O T I F I C A T I O N O R W H I L E T H E R E V I E W I S I N P R O G R E S S , T H E R E M E D Y I M P O S E D M A Y R E Q U I R E U N W I N D I N G T H E D E A L CONTINUED >

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