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To expedite merger reviews, the Department of Justice unveiled Friday a three-pronged plan to resolve most government objections to a deal within 30 days. The initiative centers on discussions held during the first few weeks after the government is notified of a deal, on narrowly tailoring additional requests for data and on devising plans to quickly end complex reviews. “This program is good government and makes good business sense,” Assistant Attorney General Charles James said. “This initiative will enable the parties to get to the significant legal issues of a merger transaction in a clearer, more effective and more efficient way.” The program is keyed off the filing of the Hart-Scott-Rodino Antitrust Improvements Act notice. This document is required for all deals exceeding $50 million and includes the basic details of the transactions and copies of analyses and reports prepared by the companies in anticipation of the deal. By law, a company may not close a deal until 30 days after filing an HSR notice for stock deals and 15 days for cash tender offers. The government may extend the deadline by filing a so-called second request, which is a formal demand for more details on the merger. Once the company responds to the second request, the government has 30 more days for stock deals and 15 more for cash tenders to decide if to challenge the deal or let it proceed. James said regulatory staff will be “aggressive” in reviewing the HSR filing as soon as it is made and will ask merging parties within the first 15 to 30 days to voluntarily answer specific questions the antitrust division may have with a deal. The goal is to eliminate cases quickly that do not raise competitive concerns. Among the information the division wants is a description of potential product overlaps, marketing brochures, business plans, lists of competitors and sales data. “The earlier the information is provided, the sooner and more effectively the staff can determine whether a significant competitive concern exists,” the division said in the six-page document. The Justice Department also will try to meet with the parties in the first 15 to 30 days to exchange views on the potential problems with the deal. If it appears the entire case cannot be resolved without a second request, the division will work to settle secondary issues, to exclude them from the prolonged investigation. For cases involving a second request, the staff will attempt to keep the document demand as narrow as possible. This could speed up merger reviews because some second requests are so broad that companies need months to compile the data. Finally, the program permits the staff to enter side deals with parties to expedite antitrust reviews. For instance, they could agree to limit the investigation to a specific issue that the parties believe could resolve the dispute. In exchange, the companies would agree to let the division expand the investigation later if the issue is resolved. Discussions of such a plan should begin within three days of the second request. Other items that could be included in such a deal are dates for depositions, exchange of economic analyses and submission of expert analyses and a time period within which the division will respond to settlement offers. The plan also calls for the division to meet frequently with the parties to discuss the transaction. “The element of surprise in modern merger enforcement is highly overrated,” the division said. Antitrust lawyers said the program could work. “That will be great,” said Tom Brock, a partner at the Proskauer Rose law firm in Washington, D.C. “There have been instances before because of the uncertainty of the procedures to be followed that the staff has stuck with broad second requests that do not serve their interests and our interests.” Instead of focusing only on the issues in dispute, regulators have demanded reams of documents about all facets of the businesses. The result is the companies wasted resources collecting data and the government wasted time reviewing it, Brock said. Robert Doyle Jr., a partner at Powell, Goldstein, Frazer & Murphy in Washington, D.C., said the Justice Department plan is welcome guidance for the staff. Many experienced antitrust counsel, he noted, already try to bring in management and provide more documents during the initial 15 to 30 days. “The articulation of this as a policy and something regulators want to take place will be helpful,” Doyle said. James announced his desire to expedite reviews in an August speech to the American Bar Association’s antitrust section. It comes in response to complaints from some that merger reviews take far too long, with some deals requiring a year or more to secure approval. For instance, America Online Inc. needed more than a year to secure all the approvals to acquire Time Warner Inc. For current deals, waiting periods are down from a year ago, while some hover around the half-year mark. The government issued a second request for more details on Nestl� SA’s acquisition of Ralston Purina Co. 28 weeks ago. Suiza Foods Corp. is in week 20 of its Dean Foods Co. purchase. The actual waits are even longer because these time frames start when the second request is issued, typically a month or two after the deal is announced. A copy of the plan is available at www.usdoj.gov/atr. Copyright (c)2001 TDD, LLC. All rights reserved.

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