5 AGENCIES AND GENERAL COUNSEL: WHAT'S ON THEIR RADAR?

Friday 8 December 2017 I Paris ATTENDEES

54 CORPORATIONS 17 ENFORCEMENT AGENCIES

AB InBev IBM Albanian Competition Authority Aéroports de Paris Icade Airbus Iliad ARCEP Amazon Ipsen Autorité de contrôle prudentiel Arkema L'Oréal et de résolution Atos Lafarge Avril Lagardère Group Autorité de la concurrence beIN SPORTS Louis Delhaize Bundeskartellamt BNP Paribas Maersk Bollore Transport & Logistics Market Securities Commercial Court of Paris Bouygues Telecom Mediterranean Shipping BPCE Company Competition and Markets Authority British American Tobacco Microsoft Competition and Tariff Commission Caisse des dépôts Novartis et consignations Competition Authority of Kenya Orange Cargill Pages Jaunes DG COMP Casino Group Qualcomm CDC DGCCRF Servier CEG Global SFR European Commission CIT Group Siemens CMA-CGM Federal Trade Commission (US) SNCF Computer & Communications Industry Association SNCF Mobilités French Ministry for the Economy Dassault Systèmes SoftBank Robotics and Finance Engie Suez Essilor Thales French National Research Agency GE Global Research The Coca-Cola Company General Court of the EU General Electric Total Portuguese Competition Authority GlaxoSmithKline Volvo Trucks

1 5TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 8 DECEMBER 2017 - PARIS PROGRAM

08.00 Registration & Breakfast 17 ENFORCEMENT AGENCIES 10.15 CONSUMER PRODUCTS MERGERS 08.30 WELCOME & INTRODUCTORY REMARKS Etienne CHANTREL I Head of Mergers Unit, Autorité de la concurrence, Paris Mélanie THILL-TAYARA I Partner, Dechert, Paris Anneleen STRAETEMANS I Global Legal Director, Competition, AB InBev, Leuven I Director of Mergers, Competition and Markets 08.45 Colin RAFTERY OPENING KEYNOTE SPEECH Authority, London Carles ESTEVA MOSSO I Deputy Director General Mergers, David SEVY I Executive Vice President, Compass Lexecon, Paris/Brussels DG COMP, Brussels Fabian PAPE I Head of Unit, German and European Merger Control, Bundeskartellamt, Bonn 09.15 MERGERS AND INNOVATION Greg SIVINSKI I Associate General Counsel, Microsoft, Redmond

Giulio FEDERICO I Merger Coordinator - CET, DG COMP, Moderator: Paul T. DENIS | Partner, Dechert, Washington D.C. Brussels Elizabeth KRAUS I Deputy Director for International Antitrust, 11.15 Coffee Break US FTC, Washington D.C Pascal BELMIN I Head of EU Regulatory Affairs, Airbus, Paris 11.30 IN-HOUSE COUNSELS SHOWCASE Susan JONES I Head of Corporate Antitrust, Novartis, Basel SESSION: DILIGENCE, INFORMATION Alec BURNSIDE I Partner, Dechert, Brussels SHARING, INTEGRATION PLANNING, David SPECTOR I Professor, Paris School of Economics I GUN JUMPING... Founding Partner, MAPP, Paris Kaarli EICHHORN I Global Executive Counsel – Competition Law & Policy, General Electric, Brussels Moderator: Michael L. WEINER | Partner, Dechert, New York François GARNIER I Executive Vice-President and General Counsel, Ipsen, Paris Camilla HOLTSE I Head of Competition Compliance, Maersk, Copenhagen Marc JANY I Group General Counsel, Dassault Systèmes, Paris Alexandre MENAIS I EVP M&A Strategy and Corporate Development and Group General Counsel, Atos, Paris Alvaro RAMOS I Head Global Antitrust, Qualcomm, San Diego Louis-Philippe VASCONCELOS I Head of M&A Legal, BNP Paribas, Paris Ermine BOLOT-MASSÉ I Partner, Dechert, Paris

Moderator: Mélanie THILL-TAYARA | Partner, Dechert, Paris

12.30 CLOSING KEYNOTE SPEECH William E. KOVACIC I Non-Executive Director, Competition and Markets Authority, London

13.00 Lunch

5TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 8 DECEMBER 2017 - PARIS 2 INTRODUCTORY REMARKS MÉLANIE THILL-TAYARA

élanie THILL-TAYARA introduced the conference M with an overview of the most recent developments in merger control. She started with a reference to the consequences and questions raised by the important Altice decision in which the French competition authority imposed an 80 million euro fine on Altice in November 2016 for implementing two mergers with telecom operators SFR and OTL respectively before clearance had been granted. Some of the principles laid down in this decision have shaken the law community, which still expects guidance from the French competition authority on gun jumping practices, although it seems that Ms. de Silva, President of the French Competition Authority, might publish an article on these As regards substantive issues, Mrs. Thill-Tayara highlighted two issues.. Guidance may also come from the European Commission, aspects that have been in the spotlight in 2017. which is currently investigating Altice’s practices in the context Firstly, with the Dow/DuPont merger, the European Commission of its acquisition of PT Portugal, or from the European Court of has developed a new theory of harm, focusing on the effects of Justice, which is expected to rule on a question for a preliminary a transaction on innovation, at the stage of R&D, which represents ruling concerning gun jumping referred to it by a Danish court a major shift in competition law analysis of mergers. For the first in the Ernst & Young P/S case. time, the Commission indeed conducted an in-depth prospective Mrs. Thill-Tayara then mentioned the recent introduction of analysis and considered that the merger would have had resulted transaction value thresholds in Germany and Austria, and the in a significant reduction of innovation efforts, which led it to impose on-going reflections in France and at the European level. conditions encompassing the divestment of Dupont’s R&D activities. The objective of such transaction value thresholds is to catch Secondly, another hot topic is the evolution of market definitions operations involving start-ups, for example in the digital economy in the context of mergers in the sector of consumer products. or biotechnology sectors, which might have an interest for In its Fnac/Darty decision of 2016, the French competition competition authorities but would otherwise escape merger authority considered for the first time that brick and mortar sales control because of an unsufficient turnover to meet the traditional and online sales belonged to the same product market. thresholds. However, in order to limit the burden on companies, The evolution is also noticeable concerning the role played by she stressed that such reflections should be paired with a private labels which, in the UK, led the Competition and Market simplification of the overall merger control process for transactions Authority to consider, in two recent cases, private labels and which do not raise any competition concerns. branded products as part of one single market.

3 5TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 8 DECEMBER 2017 - PARIS KEYNOTE SPEECH CARLES ESTEVA MOSSO

arles ESTEVA MOSSO's speech focused on solutions to merger control concerns (i.e. remedies). Since the entry into C force of the Merger Regulation, the European Commission has rarely prohibited mergers; altogether only 27 cases have resulted in prohibiting a merger. In contrast, decisions with remedies are very common: the Commission has authorized over 400 mergers subject to remedies. The main issue with accepting remedies is that failure is always a very real risk. To limit the risk of failing remedies, the Commission conducts ex post studies to learn from previous cases. A specialized team also tracks cases where remedies were accepted.

The Commission has a clear preference for structural remedies (i. e. divestitures). Structural intervention is the best way to solve the issues posed by a merger. Out of all remedies implemented in the past, 75% have been structural remedies. If multiple solutions are available, simplicity should always prevail. As a principle, when a business is divested, it must include all assets necessary to ensure its viability and competitiveness. This means that the divestiture must not only include the assets used to function in the present, but also those which will ensure it to function in the future. Hence, R&D assets and innovation are part of the divested business. This principle applies to all cases, not only the cases which raise a specific innovation problem. It should also be noted that frequently, Mr. Esteva Mosso stressed the importance of cooperation between assets which are not used directly on the market concerned will also competition authorities throughout the globe. Cooperation is essential have to be divested to ensure viability and competitiveness of the business when global markets are at stake and authorities need to agree on as part of the remedies. However, in some cases there is no stand-alone common remedies. For regional or national markets, close links between business to divest. The competition authorities may need to artificially them could also require transnational cooperation. Authorities should put assets together within the undertaking in order to recreate a business. cooperate in order to stay informed about each other’s process; otherwise When the divestiture is complex or partial, for e.g. in a carve-out situation, one case could face incompatible remedies. One central issue is that merger control is national, or in the case of the European Union, regional. the Commission needs to ensure that there are safeguards to protect This means that global players may end up with their business fragmented the customer or the end consumer. and divested in various jurisdictions under very different terms. The question is whether the divestitures will create a new player able to Another aspect crucial for structural remedies is the identity of the buyer. compete against the player which is already present on all markets The Commission has developed safeguards to be sure to identify the globally. In some cases, the solution of a global buyer may help to restore right purchaser for the divested business. In more and more cases, competitiveness. But this is not a general solution. One of the key factors identifying an up-front buyer (i.e. before the closing) has proven necessary. for navigating merger control around the world successfully is planning ahead for remedies allowing the authorities to comply with their duties i.e. Prohibiting a merger due to insufficient remedies implies making tough protecting consumers from anticompetitive operations. A company engaged calls, but it is the responsibility of competition authorities. One must not in a merger should not carry out the entire procedure before one competition forget that their decisions are subject to judicial review. For approval authority before submitting its case to another competition authority, decisions, third parties may also challenge these decisions before court because the second authority may not always be able to take into account and they often do so. the decision and remedies of the first competition authority.

This summary and the views expressed cannot be deemed to reflect the position of the speakers' institutions.

5TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 8 DECEMBER 2017 - PARIS 4 PANEL 1 MERGERS AND INNOVATION

ichael L. WEINER introduced the panel by laying out proof for effiency defenses might make it more likely that a merger the main issues relating to innovation in a merger control will, some time in the future, be decided on efficiency grounds. M context. There is an ongoing academic debate as to Alec BURNSIDE discussed the Commission’s recent decision whether concentration in a market promotes innovation, which in Dow/DuPont. He pointed out that there have been conflicting is reflected in the enforcement activities of competition authorities. messages coming out of the Commission. On the one hand, A clear U.S. example is the 2010 Horizontal Merger Guidelines members of the Chief Economist Team (CET) have been excited which suggest that a merger could reduce incentives to continue about new innovation effects theories and intuitions. On the other innovation activities that are directed at products which may hand, the Commission has been at pains to point out that there cannibalise sales of the merged firm’s existing products. A number was nothing novel about the manner in which innovation effects of practical questions arise. On most markets, it may seem difficult were assessed in Dow/DuPont. In doing so, it pointed out that to measure innovation for basic research: research is most often there was a significant body of evidence that supported its conducted in secret, the outcome is uncertain, and defining one innovation theory of harm including public statements by the “stage of innovation” where a competitive concern could emerge parties that R&D expenditure would be reduced, evidence on seems problematic. Moreover, if innovation competition issues overlaps between lines of research and patent data. This raises are identified in a merger, the types of remedies which could be a fundamental question about the role the CET is supposed to envisaged are difficult to assess. play, namely as a check and balance on the work of the Case Giulio FEDERICO* started by considering the question of the Team. However, in Dow/DuPont the CET has been pushing theory of harm in innovation cases. For a competition authority, unorthodox theories of harm that mark a departure from established the innovation theory of harm is establishing whether a merger merger control practice. between two close competitors could reduce of competition on Pascal BELMIN agreed with Alec Burnside and highlighted the future products, not current products. The harm is where the fact that most cases faced by competition authorities involve merger could lead to a reduction of innovation incentives for the late-stage R&D and “tangible” future products. By climbing up players and ultimately also higher prices for future products as. the research chain, the assessment becomes much more complex If the two competitors divert customers from each other by and uncertain. The potential impact of a merger becomes more engaging in price and non-price competition, this effect will be remote. The question is whether the innovation theory of harm internalized after the merger, to the ultimate detriment of consumers. and competitive test should be systematically applied. Firms can However, there could also be positive effects i.e. so-called decide to seek innovation but they cannot decide to innovate: efficiencies. The traditional unilateral effects framework, including there is a big share of risk in innovation. That is why the framework the assessment of barriers to entry or closeness of the competitors, for unilateral price effects is more difficult to apply there. If the remains relevant in the context of innovation. Commission applies standards which are too stringent or David SPECTOR stressed that the main problem is the dissymmetry unpredictable for the companies, it could slow down innovation, between the ease with which the European Commission can which is against the European Union’s best interest. In short, formulate an innovation theory of harm and the difficulty in unilateral effect on innovation is a concept which should be articulating an innovation-based efficiency defense in manner handled with utmost care by regulators, despite the claim that than meets the EU Merger Guidelines’ criteria - in particular, underlying economic justification would exist. merger-specificity – to the requested high standard. This difficulty Susan JONES began by making a clear distinction between results from the very nature of merger-specific efficiency gains. R&D programs and innovation, which is often overlooked. More Economists have for a long time wondered why some actions R&D does not necessarily mean more innovation – the likelihood are undertaken better within firms than through the market that R&D will lead to innovation depends on many factors, and interaction of independent agents. According to the now-prevalent most importantly the quality of R&D. The magnitude of the R&D view, the answer is often “incomplete contracts”: when a spendings is not the only factor at play. Other factors are equally contemplated cooperative project involving independent firms is important, such as culture in a company (diversity and inclusion, likely to lead to uncertain, complex outcomes that are hard to encouraging employees to take risk…). Innovation requires a list and describe in advance, it may be impossible to write very fact-specific assessment. As innovation is qualitative, using contracts that adequately protect both parties’ interests. In such quantitative measures may complicate the assessment. a case, a merger may be the only solution. This explanation relies on the idea that important parameters of cooperation cannot be Elizabeth KRAUS agrees that a fact-based approach is key. adequately described – which makes it often difficult to submit The U.S. agencies ultimately have the burden of providing evidence to competition authorities precisely documented, verifiable claims showing impact on consumer welfare. Thus, the further we get about merger-specific efficiencies. In a paradoxical way, Dow/ from an actual or future product market into a pure innovation DuPont might offer a way out of this paradox, because the market, the more difficult it can become to predict how consumer Commission’s innovation theory of harm seemed to lower the welfare will be harmed. That’s not to say that it is impossible, standard of proof. A corresponding lowering of the standard of but more difficult. Most of the cases in which the FTC has taken

This summary and the views expressed cannot be deemed to reflect the position of the speakers' institutions.

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1 Michael L. WEINER, Partner, Dechert, New York 2 Giulio FEDERICO, Merger Coordinator - CET, DG COMP, Brussels 3 David SPECTOR, Professor, Paris School of Economics Founding Partner, MAPP, Paris 4 Alec BURNSIDE, Partner, Dechert, Brussels 5 Pascal BELMIN, Head of EU Regulatory Affairs, Airbus, Paris 6 Panel

7 8 7 Susan JONES, Head of Corporate Antitrust, Novartis, Basel 8 Elizabeth KRAUS, Federal Trade Commission, Washington, D.C.

enforcement action involve near-term, discernible products. With David SPECTOR stated that, according to thim, Dow and other regard to pure innovation markets, the FTC examined the similar cases in the pharmaceutical sector should not be interpreted consummated Genzyme/Novazyme merger in 2004, involving generally. In Dow, the Commission analyzed innovation the way the only companies conducting pre-clinical trials for a rare infant it would analyze substitute products: this was standard unilateral disease. The majority of the Commission decided to close the effects reasoning. But in many cases, even when firms produce investigation following a careful investigation analyzing the effects substitutes, they are engaged in complementary R&D (for instance of the merger on the pace and scope of research, with Chairman on complementary attributes of the same good). These cases Muris providing a detailed statement examining whether the are precisely those when the Dow theory of harm would be merger would alter the parties’ pre-merger incentives and abilities unlikely to apply and efficiencies might be more likely. to launch their products, how those products would likely compete Pascal BELMIN concluded by welcoming the fact that, as following the merger, and accepting efficiency claims that the indicated by the FTC,in the U.S., no exploratory innovation case combination of the firm’s unique skills could accelerate the was eventually pursued (the only case to date has been closed development of a possible therapy. In the 2016 Teva/Allergan without finding anticompetitive impact), and in Dow, the Commission case, the Commission agreed to a consent order affecting 79 case ended up with remedies primarily because there was also discrete drug products (where the parties were actual or would a strong product overlap impact – from the there, divestiture also be future competitors). As part of its review, FTC staff also encompassed R&D assets, to ensure the viability of the divested investigated whether the merger might dampen the parties’ business. The practice of the authorities therefore seems reassuring. incentives to develop new complex generic generics, assessing If authorities were to pursue a more pro-active approach of the parties’ in-house technical capabilities to develop drugs and unilateral effects on innovation, lowering the threshold for the whether the merger would combine two of a very small number theory of harm should lead to lowering the threshold with regard of firms with the strongest capailities to succsseffully innovate in to efficiencies and allowing these to be characterized in a far a specific direction, finding that the merger did not raise competitive more effective manner than today. A balance needs to be found concerns in this regard. to avoid hampering innovation.

5TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 8 DECEMBER 2017 - PARIS 6 PANEL 2 CONSUMER PRODUCTS MERGERS

aul T. DENIS introduced the panel by highlighting a quantitative way of measuring the competitive pressure of the importance of consumer products in competition the online sales. P law and merger control in particular. Some key concepts Fabian PAPE pointed out that most cases dealt with by the of merger control regulation have been developed in consumer Bundeskartellamt were in the food sector where online sales products mergers, such as countervailing power or vertical do not represent an important competitive constraint. foreclosure issues. The impact of the digital economy and In contrast, the competitive pressure from online sales was the continued growth of the consumers’ willingness to buy factored in to assess the impact of a merger in the book products online have tinted recent merger control practices. sector. However in Germany and other countries there is Colin RAFTERY raised the questions of the appropriate legally binding price maintenance for books, so this sector framework for the assessment of a merger and of the elements is also specific. presented to support the assessment. In the recent case Anneleen STRAETEMANS highlighted the increased pooling JD Sport/Go outdoors, the role of online commerce was of purchasing power by retailers through consolidation, but essentially the tipping point that enabled competition concerns to be dismissed in certain local areas. In the UK, the framework also through buying alliances which frequently are regional for merger control assessment in the retail sector rests on or pan-European. Framework negotiations setting key terms two principles: first, the starting point for competition is local; of cooperation therefore more and more take place at a and secondly online and bricks and mortar retailers are pan-European level. This evolution contrasts with consumer traditionally separate segments. When defining the relevant preferences and behaviors still varying greatly from one market, there was not enough evidence to include online country to the next, leading to diversified portfolios and sales together with bricks and mortar retailers. In its competitive different retail price levels across EU member states. assessment, the CMA looked at traditional issues such as This means that wholesale markets could be considered the closeness of the competitors, out-of-market constraints transnational while retail markets remain national. etc. In some local areas, where the in-market constraints David SEVY agreed with Anneleen Straetemans in terms of were limited, the additional constraint provided by online increased countervailing buyer power in the retail sector. sales was enough to guarantee competitive pressure and According to him, a lot of consolidation at retail level is due the merger was unconditionally cleared. In defining the relevant to loss of buyer power vis-à-vis powerful supplying companies. markets, the key question in this case was diversion vs. In some sectors, retail alliances can have a horizontal rationale migration. Diversion reflects the flow of customers to the (in response to the development of online sales) or a vertical online channel in response to a price increase in bricks and rationale (restore buyer power vis a vis strong suppliers). mortar channel. Migration reflects the flow of customers who In all cases, it can have efficiency effects, by lowering down would switch to online sales regardless of relative changes purchasing costs, but these depend on how competition in the bricks and mortar channel. As a competition authority, operate both upstream and downstream. the CMA needs to take the Internet into account because customers are willing to use it. However, there are limits to Colin RAFTERY mentioned the Hain Frozen Foods/Yorkshire the willingness of customers to switch to the Internet channel. Provender merger case because the CMA considered that The fact that customers would often look online prior to going private label products were part of the same relevant market to buy the product in the store was not enough, by itself, to as branded products. One of the main questions was whether show sufficient diversion. the private label products were effectively only cheaper alternatives to branded products or whether the product Etienne CHANTREL agreed that the traditional approach characteristics, for example in terms of pricing and quality, is to consider that the physical stores market and the online and how they were sold, for example in terms of shelf market differ in many ways (delivery, consumer reviews). placement, showed that they were substitutes. In the Hain In the Fnac/Darty case which led to a Phase 2 decision, the case, the CMA also observed that customers were willing to French Competition Authority considered that the two segments shift from branded products to private label products and actually constituted one single market. It was the first time vice versa from one trip to the supermarket to the next. in France. The companies were both active on the physical Overall, the evidence on substitution in that case supported market and the online market. The French Competition the conclusion that branded and private label products were Authority conducted a large survey which showed considerable part of the same market. diversion. Once it was decided that both segments would be treated as a single market, the first consequence could Fabian PAPE mentioned a merger in the ice cream market have been to define a national market, but the decision between white label ice cream makers, in which the considered the retail market should still be local. The market Bundeskartellamt found strong evidence that the markets of shares of the pure players were difficult to assess. Combining private labels and brands were different for several reasons: the two markets allowed the French Competition Authority different players were active in both markets, the marketing

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1 Paul T. DENIS, Partner, Dechert, Washington D.C. 2 Colin RAFTERY, Director of Mergers, CMA, London 3 Etienne CHANTREL, Head of Mergers Unit, Autorité de la concurrence, Paris 4 Fabian PAPE, Head of Unit, German and European Merger Control, Bundeskartellamt, Bonn 5 Anneleen STRAETEMANS, Global Legal Director, Competition, AB InBev, Leuven 6 Panel 7 David SEVY, Executive Vice President, 7 8 Compass Lexecon, Paris/Brussels 8 Greg SIVINSKI, Associate General Counsel, Microsoft, Redmond strategies were different and the negotiations with retailers were from the private labels, which is a positive effect that could be part led differently. However, in other cases involving frozen pizzas, of a merger control assessment. ketchup and margarine, the Bundeskartellamt leaned toward a single market between private labels and branded products because Greg SIVINSKI considered the AT&T/Time Warner merger case these products were placed together on the shelves and the price in which the DOJ is seeking divestiture. This is a purely vertical differentials were not very important. Each case needs to be merger – these are most often solved with behavioral remedies. decided on its own merits and there is no black letter rule. In this case, the basis of the theory of harm is not the high share of Time Warner in an upstream or downstream market; the DOJ Anneleen STRAETEMANS indicated that even in markets where is pursuing a bargaining leverage theory in which post-merger brands tend to play an important role, private label products pose AT&T would have the option to walk away from negotiations for a competitive constraint, not in the least because retailers do not shy away from using information on new product launches by access to certain Time Warner “must-carry content” causing branded goods manufacturers to launch competing private label consumers to switch to AT&T DirecTV. The DOJ asserts that this products. In addition, retailers invest more and more in their private in turn would give AT&T additional leverage to impose a price label brands. increase in negotiating with upstream distributors, which would ultimately raise the price of downstream content to consumers. David SEVY pointed out that the logic of introducing white labels The decision by the DOJ has raised questions, not the least of was to create an alternative to the branded product in order to allow the retailers to have more bargaining power. As regards which is that the bargaining leverage theory has no limiting principle. innovation, white labels may also have a role to play. On the one Note as well that the DOJ has refused to accept behavioral remedies hand, they may free ride on branded product innovation and like those it accepted in Comcast/NBCU because they are in effect thereby slow down this innovation. On the other hand, they could economic regulations imposed outside of the Administrative enhance the brands’ incentive to innovate : studies show that the Procedures Act, which put the DOJ in the role of a price regulator top level brands tend to get ahead and differentiate themselves instead of a law enforcement body.

5TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 8 DECEMBER 2017 - PARIS 8 PANEL 3 IN-HOUSE COUNSELS SHOWCASE SESSION: DILIGENCE, INFORMATION SHARING, INTEGRATION PLANNING, GUN JUMPING…

élanie THILL-TAYARA explained that, until the Louis-Philippe VASCONCELOS stated that the company Altice case in France, European competition and the shareholders expect to deliver and protect the M authorities have generally had little experience on enterprise value. When facing a company which is running gun jumping issues, as opposed to U.S. authorities, where well, there is a reason not to be implicated in the management. the practice is much more developed. Absent any precise But facing a company which has potential but is mismanaged, guidelines, one of the main issue raised by the Altice decision the stand-still obligation as applied in the Altice decision is more difficult. However, some solutions may be possible, in France is the extent of the interference of the acquirer with for e.g. it is possible to negotiate during signing so that certain the target’s business in order to preserve its economic value remedies will be implemented by the seller before closing. during the transitory period between signing and closing. Another important issue is the role of clean teams, and the Kaarli EICHHORN suggested that the key to managing pre-closing issues could be maintaining a hypothetical nature of information which the parties are allowed to exchange assumption that the deal will ultimately not go through. This during the due diligence process and between signing and means that internally, walking away from the transaction closing to prepare the integration of the target. should leave both parties in a situation that is comfortable regarding information flows. Ermine BOLOT-MASSÉ recalled that practioners reacted strongly to the Altice decision because the rules were contrary Marc JANY agreed that buyer has an objective, and maybe to what was common practice. The period between signing an entitlement, to protect enterprise value. Regarding and closing is becoming longer and longer due to the process covenants, the Altice decision may have not challenged entirely the way company draft them. The French Competition before competition authorities. The conclusion of the Authority imposed a fine on Altice for extreme misconduct. practioners is that the mechanisms proposed by the authorities The approach in drafting agreement may not have changed to protect the buyer’s legitimate interests, such as a price fundamentally but the buyers’ approach may be more adjustment mechanism, do not necessarily work. respectful of the rules. François GARNIER observed that during the time between Camilla HOLTSE explained that the recent merger undergone signing and closing, which can be long in practice, there is by Maersk took over 12 months although it was a relatively a stand-still obligation whose purpose is to make sure that simple merger between number 1 and number 9 on the market, and the process was diligently followed on the the value of the target will not be influenced by other company’s side. The global merger review becomes more companies. The aftermath of the Altice decision is a struggle and more complex. The approach to gun jumping should because it was not the practice of the M&A committee for allow companies to have access to information and effectively a long time. The target remains independent but as the buyer prepare for meaningful integration of the target to avoid is committed to a price, it wants to make sure that it will not tremendous customer loss. be negatively impacted. Alvaro RAMOS agreed with Camilla Holtse and stressed Alexandre MENAIS agreed with Ermine Bolot-Massé on the damaging length of the procedure in fast-moving markets. This is a procedural issue which is completely unconnected the fact that considered that disputes over price adjustment with potential harm to competition. It may slow down beneficial do not facilitate the integration of the target and are not movements on the market simply because the procedure is practical. Practically speaking, the enterprise value needs too heavy. On access to information for the purpose of due to be maintained until at least after the closing. However, the diligence, in large acquisitions such as GE/Alstom, there was Altice decision should not be generalized and short-cuts a legitimate interest for GE to find out how they could find should be avoided. As regards the composition of clean synergies and integrate Alstom. Clean teams are one way teams for information exchange, on a case-by-case basis, to go. If the deal does not go through, they cannot go back an “insider approach” could allow to decide whether or not to their original job so the risk is high. Structuring clean teams to access information. and information flows requires meticulous work.

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1 Mélanie THILL-TAYARA, Partner, Dechert, Paris 2 Panel 3 Ermine BOLOT-MASSÉ, Partner, Dechert, Paris 4 François GARNIER, Executive Vice-President and General Counsel, Ipsen, Paris 5 Alexandre MENAIS, EVP M&A Strategy and Corporate Development and Group General Counsel, Atos, Paris 6 Louis-Philippe VASCONCELOS, Head of M&A Legal, BNP Paribas, Paris 7 Kaarli EICHHORN, Global Executive Counsel – Competition Law & Policy, General Electric, Brussels 8 Marc JANY, Group General Counsel, Dassault Systèmes, Paris 9 Camilla HOLTSE, Head of Competition Compliance, Maersk, Copenhagen 10 Alvaro RAMOS, Head Global Antitrust, Qualcomm, San Diego 6 7

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5TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 8 DECEMBER 2017 - PARIS 10 CLOSING KEYNOTE SPEECH WILLIAM E. KOVACIC

illiam E. KOVACIC concluded this conference by The discipline of law and history is crucial for good reference to the respective contributions of the competition law enforcement because past work can be W panels to the topic of global merger control in used as a way of making more efficient decisions. 2017. Mr. Kovacic pointed out the uncertainty associated For enforcement agencies, case studies can be very beneficial. They can look back at former cases to verify with making difficult judgments, notably in relation to how the transaction has turned out. In fields with high levels significant levels of innovation. of uncertainty and experimentation, going back to test Regarding the panel on innovation, Mr. Kovacic stressed previous decisions appears necessary. Case study is highly that this topic has been a focus of competition law, for e.g. informative. More specifically, after giving a green light to the U.S. competition authorities had an experience with a transaction, agencies should study the outcome and where the transaction has been successful in terms of defense providers in the 1990s. The challenge here is the efficiency, they should study the factors which made the capacity to solve problems through pure innovation. Three deal successful. ideas stand out in this field. First, the current capability of firms to innovate allows for the assessment of the impact A final question concerns the way changes in rules and on innovation. Secondly, the culture of the firm is important, law enforcement affect the practice. Business people and enforcement agencies should engage in a conversation particularly where a firm with a will to come up with about how specific previous transactions turned out, using unconventional solutions could be absorbed by a firm with detailed reconstitution. Agencies should also focus of an a more traditional approach consisting in extending its efficient mix of old and new, for e.g. considering online existing products. Thirdly, The demonstrated ability of the commerce as a constraint. How to evaluate innovation firms to deliver allows to distinguish between new ideas markets. A key element of good process and procedural and the willingness of consumers to purchase the new fairness is a great team on the economic side and the product offered. law side.

This summary and the views expressed cannot be deemed to reflect the position of the speakers' institutions.

11 5TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 8 DECEMBER 2017 - PARIS PRESS REPORTS CONTENTS

Interview with Kaarli Eichhorn, Interview with Elizabeth Kraus, General Electric by Alec Burnside, Dechert 12 Federal Trade Commission by Paul T. Denis, Dechert 13 Concurrences Review Concurrences Review

INTERVIEW WITH KAARLI EICHHORN, GENERAL ELECTRIC BY ALEC BURNSIDE, DECHERT

> Concurrences Review, 4 December 2017

oes the European Commission’s they can improve, cut unnecessary requirements has resulted in similar requirements elsewhere approach to assessing innovation and focus efforts on important aspects of their and is unnecessary at the same time as it leads D effects in recent cases such as Dow/ review. The ECN, ICN and OECD are good to tremendous cost and delay for transactions. DuPont increase the risk of regulatory diver- examples of fora where best practices can be gence between the EU and the US? shared amongst agencies and practitioners In order to ensure that counterfactual analyses In principle, assessing innovation effects in should also continue to share their ‘user’ in merger reviews are more balanced, would mergers is nothing new in the U.S. or the EU. perspective to make the merger control process it be appropriate for the European Commission Convergence between the U.S. and the EU work better and better. The EC does look at its adopt a more lenient evidentiary standard for should remain a key priority. It’s vital that cross- procedures on a regular basis with this eye, establishing efficiencies by abandoning the border transactions involving these two closely and that’s important. Both the EC and notifying three-pronged test and bringing it into line with connected economies are subject to investi- parties need to consider how pre-notification the standard of proof for establishing compet- gations by their respective competition agencies procedures can be done more efficiently than itive harm (i.e., a balance of probabilities)? where theories of harm and outcomes (including today. The length of these discussions has Efficiencies must under the current three-pronged remedies) are not conflicting. increased significantly on account of the test meet a high standard of verification and expanded data requirements and analyses that there are indeed very limited examples of where Do you believe that the EU merger control the EC today conducts in many cases and efficiency claims have been accepted, which process is need of reform since it has become where the EUMR deadlines for phase I and may suggest that there is an imbalance. too burdensome for the notifying parties? This phase II aren’t sufficient. One other important Importantly, also, there may also be a feeling includes a significant increase in the scope area is when the EC exercises jurisdiction in that efficiencies are increasingly subjected to and scale of requests for data and internal the first place, something the EC has scrutiny as themselves potentially causing documents as well as protracted pre-notifi- acknowledged is an issue, given that the vast anti-competitive effects (e.g. R&D synergies vs cation discussions due to the EC front-loading majority of transactions are unproblematic. loss of innovation); this is something merging substantial parts of its analyses. A specific issue that needs to be addressed by companies and their advisors need to consider All competition agencies should subject their the EC and the NCAs in Europe is the exercise carefully, articulate clearly and engage in open procedures to regular scrutiny to see where of jurisdiction over non-EEA joint ventures; this dialogue with the EC and other agencies.

5TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 8 DECEMBER 2017 - PARIS 12 INTERVIEW WITH ELIZABETH KRAUS, FEDERAL TRADE COMMISSION BY PAUL T. DENIS, DECHERT

> Concurrences Review, 5 December 2017

nforcement agencies are increasingly ceutical products, but the Agencies have applied this As the over 130 competition-law enforcement focusing on innovation, but with no generally approach to innovation concerns in countless markets, agencies worldwide increasingly experience the E accepted models of the innovative process, from batteries to rooftop aerial measurement products, same market developments and issues in real time, how can enforcement agencies incorporate to online product review and ratings platforms. this engagement is particularly important. innovation concerns into merger analysis? The Agencies’ merger framework has proved sufficiently For example, as the U.S. agencies work to improve In assessing the potential impact of a transaction, flexible to account for innovation concerns across our knowledge and understanding in areas such as be it on price or innovation, the Agencies apply a industries, to allow for intervention in matters in which innovation competition, so are our colleagues around rigorous fact-based analysis to determine how the innovation competition may be substantially lessened the world, and we all benefit significantly from sharing merger may affect incentives. With regard to as a result of the merger, and, of course, to allow this learning and experience to promote convergent innovation, the Agencies’ 2010 Horizontal Merger mergers combining innovative firms to proceed. Our approaches. In fact, competition law enforcers and Guidelines, explain that “[the] Agencies may consider existing framework provides an excellent foundation practitioners from around the world are in Paris this whether a merger is likely to diminish innovation on which we can build further as we gain additional week to exchange views and approaches in the competition by encouraging the merged firm to insights into how concentration impacts innovation. OECD’s Competition Committee. The OECD has curtail its innovative efforts below the level that would and continues to address issues at the intersection prevail.” Does innovation by smaller or fringe incumbent of competition and innovation, including through a Notably, a merger may diminish innovation compe- firms potentially pose the same disruptive force recent project in the Competition Committee on tition in two ways: that we associate with new entrants? disruptive innovation. Similarly, the International Yes, innovation by smaller or fringe incumbent firms 1. It may reduce the merged entity’s incentive to Competition Network’s Merger Working Group, potentially can pose the same disruptive force that continue with an existing product-development effort. which is co-led by the FTC, recently started a we associate with new entrants. For example, we This is most likely to occur if at least one of the telephonic seminar series on innovation in merger merging firms is striving to introduce new products see many instances in which small firms can and do review. More broadly, convergence efforts have that would capture substantial revenues from the drive innovation. Moreover, these firms may work resulted in the development and implementation of other merging firm. with other market participants to develop, test, manufacture and/or market the resulting products standards of international best practice and consensus 2. It may reduce the merged entity’s incentive to of the innovation, including through merger. The guidance on substantive antitrust and procedural initiate the development of new products in the longer FTC’s Genzyme/Novazyme case is but one example fairness. Convergence also helps facilitate case term. This will most likely occur if a merging firm of this type of merger in the pharmaceutical sector. cooperation among competition agencies. has capabilities that are likely to lead it to develop As discussed earlier, to assess the competitive impact new products in the future that would capture of mergers involving innovation competition requires Our agencies enjoy strong cooperative relationships substantial revenues from the other merging firm. a rigorous fact-based analysis. with a large and increasing number of foreign However, these incentive reductions can occur only enforcement agencies, and our enforcement if the merger combines two of a very small number In a world in which multiple authorities increasingly cooperation helps agencies investigating a of firms with the strongest capabilities to successfully review individual mergers and acquisitions, what particular matter to achieve consistent analyses innovate in a specific direction. are the agencies doing to promote consistent and outcomes in countless cases. The depth and approaches to and remedies in mergers implicating Our investigations into innovation competition target breadth of our case cooperation continues to innovation concerns? these concerns. For example, we examine each of grow, and includes coordination on cases involving the merging firm’s ongoing R&D projects and As the FTC’s Deputy Director for International Antitrust, innovation markets. In these matters and most capabilities and compare them to those of others in I can assure you that the U.S. antitrust agencies are others in which the U.S. agencies have cooperated, the industry. We assess how the products resulting continuing and improving upon our longstanding cooperation has yielded better results for compe- from these development efforts (if successful) would efforts to engage with foreign counterparts to ensure tition and promoted efficiency for both cooperating that that the international competition law system compete, and the products from which they would agencies and subjects of an investigation. Not functions coherently and effectively. Our recently take sales. We work to understand how the merger only does cooperation help agencies to improve revised International Antitrust Guidelines identify that might impact the speed and efficiency of innovation. substantive analyses and procedures, but also, it this engagement has multiple goals, notably to: In short, we engage in a fact-specific assessment increase global understanding of different jurisdictions’ helps to ensure that investigations and remedies of the transaction, including, as appropriate, merger- respective antitrust laws, policies, and procedures; are as consistent and predictable as possible, specific dynamic efficiencies. contribute to procedural and substantive convergence which improves outcomes, preserves agency Classic examples of the application of this framework toward best practice; and to facilitate enforcement resources, and reduces uncertainty and expense for analysis to innovation pertain to pipeline pharma- cooperation internationally. to firms doing business across borders.

13 5TH ANNUAL GLOBAL MERGER CONTROL CONFERENCE 8 DECEMBER 2017 - PARIS VIDEOS During the conference some of the speakers summarised their speeches in short videos. These can be watched at concurrences.com (Conferences > 8 December 2017).

Carles ESTEVA MOSSO William E. KOVACIC Pascal BELMIN Alec BURNSIDE Etienne CHANTREL Deputy Director General Mergers, DG COMP Non-Executive Director, Competition Head of EU Regulatory Affairs, Airbus Partner, Dechert Head of Mergers Unit, and Markets Authority Autorité de la concurrence

Kaarli EICHHORN François GARNIER Marc JANY Michael L. WEINER Alexandre MENAIS Global Executive Counsel – Competition Law Executive Vice-President and General Counsel, Group General Counsel, Dassault Systèmes Partner, Dechert EVP M&A Strategy and Corporate Development & Policy, General Electric Ipsen and Group General Counsel, Atos

Colin RAFTERY Greg SIVINSKI Anneleen STRAETEMANS Paul T. DENIS Director of Mergers, CMA Associate General Counsel, Microsoft Global Legal Director, Partner, Dechert Competition, AB InBev TESTIMONIALS

Excellent conference. What makes this conference so The conference is a great opportunity to put firms special and relevant is the true mix of speakers which means and DG COMP face to face! “ that the various subject matters are addressed from the point BENJAMIN TANNENBAUM, CEG Global of view of enforcers, practitioners, economists and in house counsels which adds perspective for all. “

CAMILLA HOLTSE, Maersk An unbelievably good line-up of speakers from all over the world on the hottest issues in merger control today. Concurrences’ Global Merger Control Conference And great to see such an eloquent and talented senior is a unique opportunity to exchange views with antitrust woman antitrust lawyer, Melanie Thill-Tayara, opening regulators, peer companies and the antitrust bar on emerging the event, rather than a man – what a nice change! “ issues affecting antitrust professionals. The organizers ANNE MACGREGOR, Dechert succeed every year in bringing together a highly diversified and distinguished group, making it one of the annual events not to be missed. “

ANNELEEN STRAETEMANS, AB InBev

I found this conference very instructive and interesting on key issues in the field of merger control. It gave to the audience a particularly good insight on the latest legal cases. “

LAURENT SCHWEBEL, Autorité de contrôle prudentiel et de résolution

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