According to this McDermott Will blog, the FTC has its nose out of joint about the pace of implementation of required post-closing divestitures – and that may result in a harder line on divestiture remedies in the future. Here’s the intro:
The US Federal Trade Commission (FTC) recently extracted a $3.5 million civil penalty from two companies involved in a gas station merger. The FTC asserts the companies violated their settlement agreement with the government, which required the divestment of 10 gas stations within 120 days from the date of the settlement agreement. The parties overshot the divestiture deadline by more than three months. The Commission stated its deadlines are not a suggestion and it will not permit parties to profit from order violations of any kind, including late divestitures.
FTC commissioner Rohit Chopra’s dissenting statement, made in an unrelated case just two weeks prior to this fine, emphasized that divestitures should be completed promptly and raised concerns with settlements involving divestitures that are made “after a prolonged period of time.” Taken together, if there is a change in administrations in November, we may see even more focus on requiring buyers up front or buyers in hand for mergers that require divestitures to gain clearance.
The blog provides additional details on the case and its potential implications. Even without a change in regimes in DC, these may include the FTC & DOJ pushing for additional terms in settlement agreements to add more bite to parties’ violations of those terms, including the divestiture timeline.
– John Jenkins