UNITED STATES DEPARTMENT OF JUSTICE ANTITRUST DIVISION David L. Meyer Deputy Assistant Attorney General U.S. Department of Justice Antitrust Division Fix-It-First and “Stage 1” Remedies in the United States BIICL Trans-Atlantic Dialogue May 1, 2007

UNITED STATES DEPARTMENT OF JUSTICE ANTITRUST DIVISION 2 Basic overview of the U.S. merger review process Basic overview of U.S. merger remedy principles Stitching it together: remedies “early” in the merger review process

UNITED STATES DEPARTMENT OF JUSTICE ANTITRUST DIVISION 3 The U.S. Merger Review Process HSR filing triggers waiting period of 30 days (sometimes less). Waiting period is often terminated early when there are no competitive issues or issues are easily resolved. Prior to expiration of first 30-day period, reviewing agency may extend waiting period by making formal request for additional information – so-called “Second Request.” Parties may, one time, “pull and re-file” prior to issuance of Second Request – giving reviewing agency another 30 days. Once Second Request is issued, parties may not close until 30 days after “substantial compliance.” Reviewing agency often closes its investigation long before substantial compliance.

UNITED STATES DEPARTMENT OF JUSTICE ANTITRUST DIVISION 4 U.S. Merger Remedy Principles The Antitrust Division will not accept a remedy unless there is a sound basis for believing a violation will occur. Restoring (or preserving) pre-merger levels of competition is the goal. The remedy must be enforceable; structural remedies are strongly preferred. If divestitures will occur after closing, the assets to be divested must be held separate, distinct and saleable. [Source: DOJ Policy Guide on Merger Remedies]

UNITED STATES DEPARTMENT OF JUSTICE ANTITRUST DIVISION 5 How Do Potentially Anticompetitive Mergers Get Remedied Early in the Process? Parties restructure deal before coming before the agency The “fix-it-first” – a structural remedy that the parties implement and the Antitrust Division accepts before the merger is consummated A consent decree – parties negotiate a settlement that resolves the Division’s competitive concerns –Division files complaint in federal court alleging violation –Parties stipulate to entry of a decree (aka the Final Judgment) and Hold Separate Order –Parties typically may consummate subject to HSO –Under the Tunney Act, court reviews whether the proposed Final Judgment is in the “public interest” –Court enters Final Judgment A “pocket decree” – a decree executed but not yet filed

UNITED STATES DEPARTMENT OF JUSTICE ANTITRUST DIVISION 6 The Typical Path – Resolution via Consent Decree Can occur before or after issuance of Second Request. –Typically, but not always, Second Request is issued to provide time for negotiations and preserve agency’s jurisdiction to continue its review. Can be used in friendly and hostile transactions. Recent example: –Cemex/Rinker: Second Request issued but not complied with A hybrid case: Mittal/Arcelor –“Pocket decree” negotiated and executed to avoid Second Request; filed after further investigation completed

UNITED STATES DEPARTMENT OF JUSTICE ANTITRUST DIVISION 7 The Fix-it-First Discussions can occur prior to HSR notification, or post- HSR and before or after issuance of Second Request. Agency must satisfy itself that “fix” is adequate. Recent examples: –Cinemark/Century: Parties divested movie theater in Corpus Christi, Texas to avoid competitive concerns Parties negotiated and completed sale before receiving Second Request, after having “pulled and re-filed” to get more time. –American Steamship/Oglebay Norton: Parties revised their transaction to encompass six instead of nine vessels, eliminating competitive concern. Revised transaction may require new HSR filing.

UNITED STATES DEPARTMENT OF JUSTICE ANTITRUST DIVISION 8 A Conceptual Timeline for a Merger Requiring Remedy The Merger Review Process Pull and Refile (??) Second Request HSR Notification Deal Conceived Substantial Compliance 30 indefinite STRUCTURE SO NOT ANTICOMPETITIVE FIX IT FIRST???? CONSENT DECREE, FOLLOWING SUFFICIENT INVESTIGATION End Waiting Period