Antitrust and Competition Law: Strategies for Investigations and Deals

A company that is accused of participating in a cartel or price-fixing agreement must challenge the government's evidence that a genuine agreement existed, as opposed to parallel pricing that resulted from each competitor independently responding to the same market signals, and antitrust and competition counsel defending a cartel investigation must evaluate whether the communications between competitors that the government relies on are equally consistent with lawful information exchange, whether the pricing conduct alleged to evidence the cartel was actually driven by independent business decision-making, and whether a leniency application would produce a more favorable outcome than contesting the charges.

A company whose premises are subjected to an unannounced inspection by competition authority investigators must immediately contact antitrust counsel, designate a single point of contact to accompany the inspectors, and ensure that employees understand their rights and obligations before making any statements, and antitrust practice counsel advising on a dawn raid response must evaluate whether the inspectors' authorization documents define the scope of the inspection narrowly enough to prevent the collection of materials outside the investigation's subject matter and whether any statements made by employees during the inspection are accurate and do not create unnecessary admissions.

A company that a competition authority has designated as dominant in a particular market must challenge the authority's market definition if that definition artificially inflates the company's apparent market share, and unfair trade practices counsel advising on a dominance investigation must evaluate whether the geographic and product market boundaries drawn by the authority accurately reflect the substitution possibilities available to consumers, whether the company's market share calculation is accurate given the competitive constraints imposed by actual and potential competitors, and whether any conduct characterized as abusive has a legitimate business justification that the authority has failed to consider.

A company that is accused of engaging in unfair trading practices through exclusive dealing arrangements, loyalty rebates, or internal transactions with affiliated entities at non-arm's-length prices must demonstrate that the conduct has a legitimate business purpose and does not cause the type of competitive harm the relevant law is designed to prevent, and administrative law counsel advising on unfair trade practice allegations must evaluate whether the pricing or contractual conduct alleged to be unfair satisfies the legal standard for competitive harm and whether any efficiency justifications can demonstrate that the conduct produces net consumer benefits.

A company that is seeking merger control clearance for a transaction that raises horizontal or vertical competitive concerns must present the reviewing authority with a compelling economic analysis demonstrating that the transaction will not impair the competitive process, and merger clearance counsel advising on a merger control filing must evaluate whether the transaction's market share effects fall within the ranges that have historically triggered detailed review, whether the efficiency gains claimed by the merging parties are verifiable, merger-specific, and sufficient to offset any competitive harm, and whether the reviewing authority is likely to identify vertical effects from the combination of upstream and downstream market positions.

A merging company that faces a request by the reviewing authority to accept structural or behavioral remedies must negotiate the scope and design of those remedies in a manner that eliminates the authority's competitive concerns while preserving the economic rationale for the transaction, and consent decrees counsel advising on merger remedy negotiations must evaluate whether a proposed divestiture package is sufficient to restore competition in the affected markets and whether behavioral commitments are a viable alternative to structural remedies where no suitable divestiture buyer can be identified.

A company that receives a competition authority decision imposing significant fines has the right to appeal that decision through the administrative review process and, where available, through judicial review, and administrative hearings counsel advising on an antitrust fine appeal must evaluate whether the authority correctly applied the legal standard for the alleged violation, whether the fine calculation methodology is consistent with the authority's published guidelines and prior decisions, and whether any procedural irregularities in the investigation provide grounds for annulment.

A company that has been found to have violated antitrust and competition law faces significant exposure to follow-on civil damages claims from customers, competitors, and other parties, and class action litigation counsel advising on the defense of a civil antitrust damages claim must evaluate whether the alleged damages were actually caused by the antitrust violation or by other market factors and whether the damages calculation methodology proposed by the plaintiff's expert overstates the harm by failing to account for pro-competitive effects of the challenged conduct.