FTC Merger Consent Order Provisions to Ensure Competitiveness

Dyan Gershman is a seasoned New York City corporate attorney who manages Gershman Law, PLLC. One of Dyan Gershman’s areas of focus is acquisitions and divestitures. She has substantial knowledge of technical elements such as merger consent order provisions.

These provisions apply in situations where one firm seeks to acquire another but discovers that there may be competition with the acquired firm within a relevant antitrust market. The Federal Trade Commission (FTC) investigates the transaction, taking several steps, such as second requests and subpoenas, which require a corporate legal response.

In such cases, attorneys from the acquiring or acquired firm often seek to coordinate an equitable settlement with the FTC. The acquiring company may agree to divest some assets to avoid what the FTC would classify as monopolistic behavior. Naturally, the acquiring company wants to limit such divestitures as much as possible. The Commission may be open to a settlement but has an overarching mission of protecting consumers from anticompetitive effects that might arise from any deal.

Given these contingencies, which follow a reasonably predictable pattern across cases, FTC provisions have developed that appear in virtually all merger consent orders. These include orders requiring an “absolute” divesture in cases of a horizontal merger. Should assets not be divested in time, the Commission also has the authority to appoint a divestiture trustee. In addition, the buyer of the assets needs to be able and willing to operate such assets in a way that restores or maintains competition across relevant markets.