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M&A Law

FTC Guidance–Avoiding Antitrust Pitfalls During M&A Negotiations and Due Diligence

By Elizabeth M. Hanus, Husch Blackwell

On March 20, 2018, the Bureau of Competition of the Federal Trade Commission (the FTC) issued guidance re-emphasizing the importance of having proper procedures and safeguards in place when sharing competitively sensitive information during pre-merger negotiations and due diligence.  In addition to the risk that such sharing of information could be viewed as evidence of an anticompetitive agreement under Section 1 of the Sherman Antitrust Act or unfair competition under Section 5 of the FTC Act, the FTC notes that pre-merger information sharing could result in unlawful “gun jumping” under the Hart-Scott-Rodino Antitrust Improvements Act (HSR).  Gun jumping can occur if the merging parties coordinate their business activities during the HSR pre-merger review period.  The FTC acknowledges the need to share information during pre-merger negotiations and due diligence, but given the risks emphasizes the need to not only have proper procedures in place, but enforce them.  Further, if any potentially improper information is shared, in addition to immediately stopping the activity, the FTC suggests that counsel should consider informing the FTC.

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