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Arguing that year-long antitrust reviews serve no one, officials at the American Antitrust Institute are proposing guidelines to expedite negotiation of consent decrees. “We want to make the whole process move quicker by putting some oil on the process,” AAI President Albert Foer said. The guidelines call for merging parties to submit detailed information with their Hart-Scott-Rodino filing about potential antitrust issues. The agencies then would give the deal priority consideration. Foer and Robert Skitol, a lawyer and member of the organization’s board of directors, will unveil the draft June 12 at AAI’s annual antitrust conference in Washington. At the conference will be incoming Federal Trade Commission Chairman Timothy J. Muris and William Kovacic, a George Washington University professor expected to be named FTC general counsel in June. The AAI guidelines are in response to the increasing length of antitrust negotiations, which are routinely taking nine to 12 months to complete. Deals where the clock is ticking include UAL Corp.-US Airways Group Inc., at 12 months since announcement, Chevron Corp.-Texaco Inc., at seven months, and Quaker Oats Co.-PepsiCo Inc., at six months. Under AAI’s plan, companies would include with their Hart-Scott-Rodino filing a memorandum detailing competitive problems and proposing a remedy. They also would submit business plans for the last two years, a list of their 20 largest customers and a description of major competitors. In exchange, the antitrust agencies would pledge that if a case went to court, they would not object to having the judge evaluate the transaction as modified by the remedy proposal rather than as originally unveiled. That is a major concession because it would make it tougher for the government to prevail in court. As part of the priority consideration, the government would identify which agency is handling a given deal within five days, meet with the parties to discuss initial thoughts on the deal within 10 days and brief the firms within 28 days on the government’s initial findings. The guidelines also explain what must be included in a divestiture proposal. One element is an explanation of how the companies will ensure the divested assets remain viable. This includes a plan to retain employees and ensure the unit continues to get supplies and other necessities. Under the proposal, buyers of divested assets also should have a business plan in place explaining how they will operate the assets profitably and in a manner that enhances competition. “You want to see not only that they have the wherewithal but all have the right ideas in place, so they can step in as a vigorous competitor,” Foer said. The guidelines also entitle the antitrust agencies to require companies to hire an independent third party, such as an investment banker, to ensure the business plan for the divested assets makes sense. Antitrust experts said guidance could be useful. Robert Joffe, a partner in the New York office of Cravath, Swaine & Moore, said the current divestiture process is inefficient. Companies involved in deals commonly claim they are not in violation of antitrust law until confronted by the agencies, which slows downs merger reviews. In addition, regulators often put too many requirements on what is sold and who buys it, he said. “The process at the moment could use some help,” he said. But Joel Mitnick, a partner with Sidley Austin Brown & Wood, said he worries the agencies would use divestiture guidelines as another excuse to tamper with transactions where no remedy is required. “My concern is this would lead to more consent decrees simply because of an expectation being set up that companies should look for divestitures up front,” he said. Besides unveiling the guidelines at its annual conference, AAI plans to honor FTC Chairman Robert Pitofsky with its Level Playing Field award. It also will hold a workshop on evaluating potential competition in merger analysis. Other sessions examine antitrust in the new economy and the role of the courts in competition policy. Copyright (c)2001 TDD, LLC. All rights reserved.

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