New Jersey and New York Lawmakers Propose New Limits on Restrictive Covenants

For years, New York and New Jersey legislators have proposed various measures that would prohibit or restrict employers from using non-compete agreements that may restrict employees’ future employment opportunities. This GT Alert discusses two bills, New York Senate Bill S4641 and New Jersey Senate Bill S1688, which propose changes to the landscape of restrictive covenants in these states.
New York Senate Bill S4641
On Feb. 10, 2025, the New York Senate introduced S4641 in response to Gov. Hochul’s veto of a prior non-compete bill (S3100A) in December 2023. Bill S4641 would add Section 191-d to the New York Labor Law, prohibiting employers from requiring any “covered individual” to enter into a non-compete agreement. The bill defines a “covered individual” as any person other than a “highly compensated individual” who, with or without an employment agreement, performs work or services for another person, “in a position of economic dependence on, and under an obligation to perform duties for, that other person.” “Highly compensated individuals” are those who are paid an average of at least $500,000 per year.
The bill would also prohibit use of post-employment non-compete agreements with regard to “health care professionals, regardless of the individual’s compensation level. Most health care providers who are licensed under New York law may fall under S4641’s definition of “health related professionals.” The law would permit employers to enter into agreements, even with covered individuals or a health care professional, which (1) establish a fixed term of service and/or exclusivity during employment; (2) prohibit disclosure of trade secrets; (3) prohibit disclosure of confidential and proprietary client information; or (4) prohibit solicitation of the employer’s clients. 
The bill would also permit non-compete provisions as part of agreements to sell the goodwill of a business or to dispose of a majority ownership interest in a business, by a partner of a partnership, member of a limited liability company, or an individual or entity owning 15% or more interest in the business. Such non-compete agreements would still need to meet the common law test as to reasonableness in time and geographic scope, a necessity for protection of legitimate business interests, and lack of harm to the public.
S4641 would create a private right of action, allowing covered individuals who are subject to a prohibited non-compete agreement to file claims in court. If the employer is found to have violated the new Section 191-d, a court may void the non-compete agreement, prohibit the employer from similar conduct going forward, and order payment of liquidated damages, lost compensation, compensatory damages and/or reasonable attorneys’ fees and costs to the employee. The bill caps liquidated damages at $10,000 per impacted individual but permits a court to award liquidated damages to every claimant.
New Jersey Senate Bill S1688
In New Jersey, the Senate Labor Committee is considering S1688, which was initially introduced in January 2024. This bill, if passed, would amend the New Jersey Law Against Discrimination (NJLAD), N.J.S.A. 10:5-12:7, and 10:5-12:8 to clarify that the prohibition of certain waivers in employment agreements includes non-disclosure and non-disparagement provisions that would limit an employee’s right to raise claims of discrimination, retaliation, or harassment. The bill would also amend N.J.S.A. 10:5-12:7(c) to remove the original carve out for collective bargaining agreements, meaning the prohibition of waivers relating to discrimination, retaliation, or harassment claims would apply in the collective bargaining context as well as individual employment agreements.
Conclusion
These proposed bills demonstrate states’ continued efforts to limit employers’ use of restrictive covenants. Prior efforts to formalize such restrictions have been mostly unsuccessful, but the New Jersey and New York legislatures still seek to narrow the scope of the restrictions.

SEC Expands Nonpublic Review Process for All Companies Intending to Issue Securities

On March 3, 2025, the Securities and Exchange Commission’s Division of Corporation Finance announced that it has enhanced its accommodations for companies submitting draft registration statements for nonpublic review. The enhancements, which took effect immediately, arrive as the SEC recalibrates its regulatory approach under new leadership, signaling a broader shift toward enhancing capital formation by accommodating a broader range of issuers and transactions.
Here are the key changes, and we provide additional detail and each enhancement’s expected impact below:

nonpublic review now available for follow-on offerings;
underwriter names now not required initially in a draft registration statement;
greater flexibility for de-SPAC transactions and subsequent offerings; and
foreign private issuers now have more options as well.

What is the nonpublic SEC Staff review process?
The SEC Staff’s nonpublic review process allows eligible issuers to submit a confidential draft registration statement to the SEC Staff before making a public filing. This process helps companies refine their disclosures by addressing SEC Staff comments and delay public scrutiny until they are ready to proceed with their offering or listing.
Originally introduced under the Jumpstart Our Business Startups Act of 2012 (JOBS Act) for Emerging Growth Companies (EGCs), the SEC Staff expanded the process in 2017 to include all issuers conducting initial public offerings (IPOs) and extended the accommodation to an issuer’s initial Exchange Act Section 12(b) registration statements.
What do the SEC Staff’s expanded accommodations mean for companies?
The latest changes build on the 2017 expansion of the availability of the nonpublic review process and now allow a broader range of issuers, for a broader range of transactions, to take advantage of nonpublic SEC Staff feedback before filing publicly.
What are the key changes and their impact?

Nonpublic Review Now Available for Follow-On OfferingsThe SEC Staff will now accept nonpublic draft submissions for subsequent securities offerings or Exchange Act registration, even if more than 12 months have passed since the issuer became an SEC-reporting company. Now, every company, regardless of when its IPO took place, gets the benefit of reducing market speculation before finalizing its intended transaction by privately submitting a draft registration statement for nonpublic review.
Omission of Underwriter Names in Initial DraftsCompanies may now omit underwriters’ names in their initial draft registration statement submissions, provided they include them in subsequent submissions and public filings. This change gives issuers more flexibility in structuring underwriting syndicates without prematurely signaling deal participants to the market.
Greater Flexibility for De-SPAC Transactions and Subsequent OfferingsWhen a SPAC, as a publicly traded entity, moves to finalize its de-SPAC transaction by acquiring a private company, it typically files a Form S-4 registration statement. Historically, if this filing took place more than a year after the SPAC’s IPO, it had to be submitted publicly from the outset. However, under the updated guidance, such registration statements may now qualify for nonpublic review (provided they meet certain criteria). Additionally, any operating company that became publicly traded through a de-SPAC transaction, regardless of its structural framework, can now submit a Form S-1 for nonpublic review within its first year as a public company, irrespective of the date of the original SPAC’s IPO.
Foreign Private Issuers Now Have More OptionsForeign private issuers registering securities under Section or 12(g) of the Exchange Act (on Forms 10, 20-F or 40-F) may now submit draft registration statements for nonpublic SEC Staff review. Now, a foreign private issuer preparing to list under Section 12(g) may privately submit its draft Form 20-F for SEC Staff review, delaying public disclosure while refining regulatory compliance. Such issuers may still choose between expanded accommodations or the existing EGC procedures if they qualify.

What else should issuers consider?
Consistent with prior guidance, the SEC Staff noted the following three points as well in the announcement:

Expedited Processing Requests: The SEC Staff is willing to consider “reasonable requests” to expedite processing for draft and filed registration statements. Issuers with tight deal timelines should engage the SEC early to discuss review timing.
Financial Information Flexibility: Companies do not need to delay submitting a nonpublic draft registration statement if certain financial information is incomplete, provided they reasonably believe the omitted data will not be required at the time of public filing.
No More Revised Draft Filings After SEC Comments: After the SEC Staff provides comments on a nonpublic draft registration statement, issuers must respond via a public filing, rather than through another confidential draft submission. Companies should prepare for transparency once SEC feedback is received.

What should companies do next?
Assess eligibility: If your company is considering an IPO, a follow-on offering or a de-SPAC transaction, determine whether taking advantage of these changes could offer strategic benefits.
Evaluate timing considerations: The ability to engage privately with the SEC Staff can help issuers control disclosure timing, but SEC review periods and investor expectations should still be factored into transaction planning.
Engage legal counsel early: Navigating SEC review timelines, disclosure requirements and capital market strategies requires careful planning and legal expertise. Consult experienced securities counsel to optimize your approach.
Important Reminder: Nonpublic does not mean permanent confidentiality
While the SEC Staff’s nonpublic review process provides issuers with the ability to submit draft registration statements privately, companies should remain aware that all nonpublic draft registration statement submissions must be made public at least two business days before the registration is finalized and becomes effective. Moreover, the SEC Staff will publicly release all comment letters and issuer responses no earlier than 20 business days after effectiveness of the registration statement. Companies should ensure that any information disclosed in nonpublic filings is prepared with the expectation of eventual public disclosure. Advance planning on investor relations and market positioning remains essential.

Court Applies Internal Affairs Doctrine Even Though Statute Refers Only To Directors

Courts are wont to say that Section 2116 of the California Corporations Code codifies the internal affairs doctrine. See Villari v. Mozilo, 208 Cal. App. 4th 1470, 1478 n.8 (Cal. Ct. App. 2012)(“Corporations Code section 2116 codifies [the internal affairs doctrine] in California.”). I have long held the position that this is only partially true. Section 2116 provides:
The directors of a foreign corporation transacting intrastate business are liable to the corporation, its shareholders, creditors, receiver, liquidator or trustee in bankruptcy for the making of unauthorized dividends, purchase of shares or distribution of assets or false certificates, reports or public notices or other violation of official duty according to any applicable laws of the state or place of incorporation or organization, whether committed or done in this state or elsewhere. Such liability may be enforced in the courts of this state. (emphasis added)

The statute makes no reference to officers. Thus, it would seem reasonable to conclude that it does not apply to officers. Courts, however, seem to miss the obvious omission of officers from the statute, as illustrated in a recent ruling by U.S. District Court Judge Janis L. Sammartino in Lapchak v. Paradigm Biopharmaceuticals (USA), Inc., 2025 WL 437904 (S.D. Cal. Feb. 7, 2025). In that case, Judge Sammartino ruled that Delaware law applied to the individual defendant even though the plaintiff failed to allege that the defendant was a director of the corporation. In fact, neither party even alleged that the corporation was incorporated in Delaware, but the court did some online checking. Finally, it is unclear from the ruling whether the individual defendant was even an officer of the corporation.
As I have previously contended, officers are agents of the corporation whilst directors qua directors are not. In many cases, their duties and responsibilities may be governed by contractual choice of law provisions and local agency and employment laws. In any event, a plain reading of Section 2116 reveals that officers have no place in it.

Corporate Transparency Act Enforcement Suspended Once Again!

On March 2, 2025, the U.S. Treasury Department announced it would not enforce any penalties or fines associated with the Beneficial Ownership Information (“BOI”) reporting rule, a key requirement under the Corporate Transparency Act (“CTA”).
In a press release, Treasury officials confirmed they would not impose fines on U.S. citizens or domestic reporting companies, effectively pausing the reporting obligations for the time being. 
Relief for Domestic Businesses
Under the original CTA guidelines, most companies with fewer than 20 full-time employees and less than $5 million in annual revenue—as well as community associations—would have been required to file their BOI reports with the Financial Crimes Enforcement Network (FinCEN). 
After weeks of legal back-and-forth, with temporary injunctions followed by stays of those injunctions, a U.S. District Court ultimately stayed the nationwide injunction, extending the compliance deadline to March 21, 2025. Now, with the Treasury’s latest move, domestic businesses are temporarily off the hook from meeting the CTA’s reporting requirements, offering much-needed breathing room for companies struggling with compliance. 
A Shift in Focus: Foreign Companies Under Scrutiny
Perhaps the biggest takeaway from the Treasury’s announcement is a shift in enforcement priorities. Moving forward, the agency plans to limit BOI reporting obligations to foreign reporting companies, signaling a departure from the previous broad enforcement approach. Treasury officials said they intend to issue new regulations to formally adjust the CTA’s scope, concentrating efforts on international entities rather than U.S.-based businesses. 
While the full implications of this change remain to be seen, the decision is expected to ease compliance concerns for American companies. Meanwhile, foreign businesses should prepare for heightened scrutiny as the Treasury reshapes its corporate transparency policies.

CFTC Acting Chairman Pham Announces Effort to Quickly Resolve Recordkeeping and Reporting Investigations and Pledges Additional Guidance on Self-Reporting and Cooperation

During her keynote address at the Futures Industry Association’s International Futures Industry Conference, BOCA50, CFTC Acting Chairman Caroline D. Pham announced a new effort to encourage market participants to resolve open investigations regarding minor compliance violations with no customer harm, in order to free up Division of Enforcement (the “Division”) resources to focus on market abuse and fraud. This effort is another in a series of steps Acting Chairman Pham has taken since her appointment to provide transparency and due process in the agency’s law enforcement function,[1] and to address the CFTC’s shift in “its enforcement program to focus on registration and compliance instead of the CFTC’s mission to prevent fraud, manipulation, and abuse in our markets.”[2]
Under the new effort, over the next two weeks, the Division of Enforcement (the “Division”) is inviting market participants that have previously self-reported to the Division minor compliance violations, such as recordkeeping or reporting violations, to present (1) an update on the market participants’ remediation and improvement plan since the self-report, and (2) a reasonable settlement offer. Importantly, the Division will only consider such a proposal only if the violations do not involve customer harm, market abuse, concerns with transparency or fraudulent conduct. If the Division determines that a market participant meets these conditions, the Division will analyze civil monetary penalties for similar conduct over the last 10 years and propose an expedited settlement with a reasonable civil monetary penalty, based on the circumstances of the case.
Additionally, Acting Chairman Pham indicated that the Division’s recent guidance regarding self-reporting and cooperation[3] is only the first step in the Division’s effort to provide regulatory clarity to market participants, and that the CFTC plans to issue additional guidance in the coming weeks that address how matters are referred to the Division from other CFTC operating divisions, including criteria for how those referral decisions will be made. 
 
[1]See Katten’s coverage of the CFTC’s Guidance on Self-Reporting and Cooperation here: https://natlawreview.com/article/clearer-skies-ahead-cftc-enforcement-divisions-new-advisory-opens-doors-self
[2]See Statement of Commissioner Caroline D. Pham on Swap Data Reporting Settlement Order and the Examination Process (Oct. 1, 2024), available at https://www.cftc.gov/PressRoom/SpeechesTestimony/phamstatement100124.
[3]See CFTC Div. of Enforcement, Advisory on Self-Reporting, Cooperation, and Remediation (Feb. 25, 2025) available at https://www.cftc.gov/media/11821/EnfAdv_Resolutions022525/download.

Texas Federal Court Holds that Dodd-Frank Act Whistleblower Protection Law Does Not Authorize Jury Trials [Video]

On February 20, 2025, Judge Horan held in Edwards v. First Trust Portfolios LP that a Dodd-Frank whistleblower retaliation plaintiff is not entitled to a jury trial.  This opinion underscores the importance of bringing additional claims that can be heard by a jury, including a Sarbanes-Oxley (SOX) whistleblower retaliation claim.
Aaron Edwards filed suit against his former employer, First Trust, alleging that he was terminated in retaliation for raising concerns about a gift program.  Edwards claimed that First Trust’s practice of only awarding gifts to financial advisors at the end of the year who sold the most First Trust products during that year constituted an illegal sales contest under SEC regulations.  He brought claims under the whistleblower protection provisions of SOX, the Dodd-Frank Act, and the Consumer Financial Protection Act (CFPA).  After Judge Horan denied First Trust’s motion for summary judgment, First Trust moved to strike Edwards’ jury demand for his Dodd-Frank retaliation claim.
In contrast to an express provision in SOX clarifying that a SOX plaintiff “shall be entitled to trial by jury,” the whistleblower protection provision of the Dodd-Frank Act does not expressly provide for a right to a jury trial, so this dispute hinges on whether Dodd-Frank Act retaliation remedies are legal or equitable in nature (if the remedies are legal, then there is a right to a jury trial under the Seventh Amendment).  Per the Supreme Court’s decision in SEC v. Jarkesy, the key factor determining “whether a monetary remedy is legal is if it is designed to punish or deter the wrongdoer, or, on the other hand, solely to restore the status quo.”  603 U.S. 109, 123 (2024).
A prevailing whistleblower in a Dodd-Frank whistleblower retaliation action is entitled to reinstatement, double back pay with interest, and litigation costs, including attorneys’ fees.  Edwards argued that double back pay damages are legal in nature because they “go beyond restoring the status quo to deter and punish Dodd-Frank violators” and that Dodd-Frank’s doubling of back pay transmutes it from an equitable to legal remedy because it “serves to deter future misconduct by litigants.”
First Trust, however, asserted that under Fifth Circuit precedent, Dodd-Frank retaliation remedies, including reinstatement and back pay, are equitable in nature.  Relying on a Georgia district judge decision, Judge Horan held that reinstatement and back pay are generally recognized as equitable remedies and that the automatic doubling of back pay does not change it from an equitable remedy to a legal one.  See Pruett v. BlueLinx Holdings, Inc., No. 1:13-cv-02607-JOF, 2013 WL 6335887 (N.D. Ga. Nov. 12, 2013).
Since Edwards is already trying his SOX claim before a jury, and the motion to strike was filed close to trial, Judge Horan held that a binding jury will be empaneled for Edwards’s SOX claim and the same jury will serve as an advisory jury for Edwards’s Dodd-Frank claim.
Strategic Considerations: Why a Whistleblower Should Bring Both SOX and Dodd-Frank Whistleblower Retaliation Claims
Where a whistleblower that suffered retaliation qualifies for protection both under SOX and the Dodd-Frank Act, we recommend bringing both claims uto maximize the potential recovery.  There are four advantages to bringing a SOX claim in addition to a Dodd-Frank claim:

Uncapped special damages: The Dodd-Frank Act authorizes economic damages and equitable relief but does not authorize non-economic damages.  In contrast, SOX authorizes uncapped “special damages” for emotional distress and reputational harm.
Exemption from mandatory arbitration: SOX provides an unequivocal exemption from mandatory arbitration, but Dodd-Frank claims are subject to arbitration.
Preliminary reinstatement: If an OSHA investigation concludes that an employer violated the whistleblower protection provision of SOX, OSHA can order the employer to reinstate the whistleblower.  However, there is some dispute as to whether an OSHA order of reinstatement is enforceable.  See, e.g., Gulden v. Exxon Mobil Corp., 119 F.4th 299 (3d Cir. 2024).
Favorable causation standard: A far more generous burden of proof (“contributing factor” causation under SOX, rather than “but for” causation under Dodd-Frank).

There are four advantages to bringing a Dodd-Frank claim in addition to a SOX claim:

Double back pay: Dodd-Frank authorizes an award of double back pay (double lost wages) plus interest, whereas SOX authorizes ordinary back pay with interest along with other damages.  Both statutes authorize reinstatement and attorney fees.
Longer statute of limitations: Whereas the statute of limitations for a SOX retaliation claim is just 180 days, the statute of limitations for a Dodd-Frank retaliation claim is a minimum of 3 years after the date when facts material to the right of action are known or reasonably should have been known by the whistleblower.
Broader scope of coverage: SOX whistleblower protection applies primarily to employees of public companies and contractors of public companies.  The Dodd-Frank prohibition against whistleblower retaliation applies to “any employer,” not just public companies.
No administrative exhaustion: In contrast to SOX, Dodd-Frank permits a whistleblower to sue a current or former employer directly in federal district court without first exhausting administrative remedies at DOL.

Whistleblower Protections for SEC Whistleblowers

Read More Here

Corporate Transparency Act : Enforcement Suspended and New Rules to Come

FinCEN and the Department of the Treasury both provided updates this week regarding the Corporate Transparency Act.
On February 27, FinCEN announced that it would release an interim final rule before the current filing deadline of March 21. It will not issue any fines, penalties, or other enforcement actions against any companies (foreign or domestic) for failing to file or update their BOI reports by March 21. Any fines, penalties, or other enforcement actions will only proceed once the interim final rule becomes effective and the new deadlines in the interim final rule have passed.
On March 2, the Treasury Department provided a further update regarding the upcoming rule changes. The proposed rule is expected to narrow the CTA’s scope so that U.S. citizens and domestic reporting companies are exempt, and only foreign reporting companies will be required to comply.

Competition Currents | March 2025

United States
  A. 1.FTC secures $5.68M HSR gun-jumping penalty from 2021 deal.On Jan. 7, 2025, the FTC, in conjunction with the Department of Justice (DOJ) Antitrust Division, settled allegations that sister companies Verdun Oil Company II LLC and XCL Resources Holdings, LLC exercised unlawful, premature control of EP Energy LLC while acquiring EP in 2021. This alleged “gun-jumping” violation involved Verdun and XCL exercising various consent rights under the merger agreement and coordinating sales and strategic planning with EP during the interim period before closing. In settling, the parties agreed to pay a total civil penalty of $5.68 million, appoint or retain an antitrust compliance officer, provide annual antitrust trainings, use a “clean team” agreement in future transactions involving a competing product, and be subject to compliance reporting for a decade.
Further information about this settlement and the factual background can be found in our January GT Alert.  2.2025 HSR thresholds took effect Feb. 21, 2025. On Jan. 10, 2025, the FTC approved updated jurisdictional thresholds and filing fees for the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976. These revisions are made annually, with the size-of-transaction threshold for reporting proposed mergers and acquisitions under the Clayton Act increasing from $119.5 million to $126.4 million for 2025. These changes took effect on Feb. 21, 2025. The adjustments are based on changes in the gross national product and consumer price index as mandated by the HSR Act and the 2023 Consolidated Appropriations Act.  3.FTC releases staff report on AI partnerships & investments. In January 2025, the FTC issued a report under former Commissioner Khan examining several partnerships among participants in the AI technology chain. Broadly, participants in the AI chain include (1) providers of specialized (and scarce) semiconductor chips used to provide the computational power to train and refine generative AI models, as well as generate the actual output (be it text, images, or data); (2) cloud service providers that enable access to computing infrastructure; (3) AI developers; and (4) AI application creators. The report highlights several areas of concern with respect to such partnerships, including traditional antitrust concerns around competitor access to important resources, increased switching costs for participants, and the exchange of sensitive technical and business information.
Current FTC Chairman Andrew Ferguson—then commissioner—issued a concurring and dissenting statement (joined by Commissioner Holyoak) shortly after the report’s release. While signaling areas of disagreement and discouraging the Commission from “running headlong to regulate AI,” the dissent does not appear to depart significantly from FTC views with respect to a focus on Big Tech when it comes to AI. According to Ferguson, “AI may [] be the most significant challenge to Big Tech firms’ dominance since they achieved that dominance.” He cautioned, however, that the Commission must strike a delicate balance, safeguarding against regulation that hinders U.S. AI technology development while ensuring that “Big Tech incumbents do not control AI innovators.”  4.FTC secures settlement with private equity firm in antitrust “roll-up” case. On Jan. 17, 2025, the FTC settled a second administrative case against private equity firm Welsh, Carson, Anderson, and Stowe and its affiliates for allegedly monopolizing certain local Texas anesthesiology markets through an anticompetitive “roll up” strategy. In May 2024, a federal judge dismissed Welsh Carson from a similar FTC action, but held that Welsh Carson’s conduct could be challenged in federal court in the future if the FTC can allege specific facts that it controls a company actively engaged in ongoing violations or is otherwise directly involved in another attempt to violate the law, “beyond mere speculation and conjecture,” and could still pursue an in-house administrative case against the private equity firm. 
The FTC settled its in-house case, discussed in a May 2024 GT Alert, in a consent order designed to both limit Welsh Carson’s investment in this space and identify future investment strategies in this or an adjacent space, which in the view of the Commission would risk becoming another anticompetitive “roll up.” The order requires Welsh Carson to:

freeze its investment in USAP at current levels and reduce its board representation to a single, non-chair seat; 
obtain prior approval for any future investments in anesthesia nationwide, as well as prior approval for certain acquisitions by any majority-owned Welsh Carson anesthesia group nationwide; and 
provide 30-days advance notice for certain transactions involving other hospital-based physician practices nationwide.

The Commission voted 5-0 to accept the consent agreement for public comment.   5.Federal court denies Commission’s bid to block Tempur Sealy’s $4B Mattress Firm deal. On Jan. 31, a Texas federal court denied the FTC’s challenge to preliminarily enjoin Tempur Sealy International Inc.’s planned $4 billion purchase of Mattress Firm Group Inc. The parties thereafter closed the merger, and the FTC then withdrew the matter from in-house adjudication, effectively ending its challenge. The FTC challenged the deal in July 2024, asserting that the combination of the world’s largest mattress supplier, Tempur Sealy, with the largest retail mattress chain in the United States, Mattress Firm, would give the new firm the ability and incentive to suppress competition and raise prices for mattresses by blocking rival suppliers from selling in Mattress Firm stores.
In September, Tempur Sealy offered to sell 178 stores and seven distribution centers to Mattress Warehouse, in an effort to alleviate the FTC’s concerns. The companies offered to preserve 43% of premium “slots” in Mattress Firm stores for rival manufacturers, up from a previous offer of 28%. The FTC countered that the court should not give weight to this “unenforceable promise” that Tempur Sealy could break at any time. The judge did state that “the proposed acquisition won’t substantially harm competition … [b]ut even if assumed to the contrary, Defendants’ commitments to divest certain stores and to maintain going-forward slot allocations resolves any lingering concern.”  6.Daniel Guarnera named FTC Bureau of Competition director. On Feb. 10, Chairman Ferguson appointed Daniel Guarnera as director of the Bureau of Competition. Guarnera previously served as chief of the Civil Conduct Task Force at the DOJ Antitrust Division. During his tenure, the task force filed monopolization suits against certain Big Tech companies, as well as multiple cases involving agriculture and labor markets. Prior to that role, he was a trial attorney with the Antitrust Division during the first Trump administration. He also served as special counsel to U.S. Senate Judiciary Committee Chairman Charles Grassley during the confirmation of President Trump’s Supreme Court appointee, Justice Neil Gorsuch.
The Commission voted 4-0 to approve Guarnera’s appointment as director of the Bureau of Competition, with Chairman Ferguson stating “[h]e has tremendous experience litigating antitrust cases in critical markets, including agriculture and Big Tech” and “using the antitrust laws to promote competition in labor and healthcare markets—two of my top priorities.”  7.FTC chair clarifies 2023 merger review guidelines remain in effect. On Feb. 18, 2025, FTC Chairman Ferguson issued a public statement to FTC staff stating if “there is any ambiguity, let me be clear: the FTC’s and DOJ’s joint 2023 Merger Guidelines are in effect and are the framework for this agency’s merger-review analysis.” Ferguson explained that FTC should “prize stability and disfavor wholesale recission,” to provide predictability for businesses, enforcement agencies, and the courts. In Ferguson’s view, the guidelines reiterate prior policy statements, guidelines, and decisional case law.   8.FTC launches inquiry on tech censorship. On Feb. 20, 2025, the FTC launched a public inquiry into how technology platforms deny or degrade users’ access to services based on the content of their speech or affiliations. The Commission’s press release said, in announcing the inquiry, “Censorship by technology platforms is not just un-American, it is potentially illegal. Tech firms can employ confusing or unpredictable internal procedures that cut users off, sometimes with no ability to appeal the decision. Such actions taken by tech platforms may harm consumers, affect competition, may have resulted from a lack of competition, or may have been the product of anti-competitive conduct.” The FTC is requesting public comment on how consumers may have been harmed by technology platforms that “limited their ability to share ideas or affiliations freely and openly.” Comments are open until May 21, 2025.  B. Department of Justice (DOJ) Civil Antitrust DivisionDOJ sues to block Hewlett Packard Enterprise’s proposed $14 billion acquisition of rival Juniper Networks.
On Jan. 30, 2025, the DOJ Antitrust Division sued to block Hewlett Packard Enterprise Co.’s proposed $14 billion acquisition of wireless local area network (WLAN) technology provider Juniper Networks Inc. The Division alleges that HPE and Juniper are the second- and third- largest providers, respectively, of enterprise-grade WLAN solutions in the United States and that the deal would “eliminate fierce head-to-head competition between the companies, raise prices, reduce innovation, and diminish choice.” The Division says that the proposed transaction between HPE and Juniper would further consolidate an already highly concentrated market.
“HPE and Juniper are successful companies. But rather than continue to compete as rivals in the WLAN marketplace, they seek to consolidate — increasing concentration in an already concentrated market. The threat this merger poses is not theoretical. Vital industries in our country — including American hospitals and small businesses — rely on wireless networks to complete their missions. This proposed merger would significantly reduce competition and weaken innovation, resulting in large segments of the American economy paying more for less from wireless technology providers,” Acting Assistant Attorney General Omeed A. Assefi said. The Division asserted that Juniper has been a “disruptive force that has grown rapidly from a minor player to among the three largest enterprise-grade WLAN suppliers in the U.S.,” and that its innovation has decreased costs and put competitive pressure on HPE that HPE seeks to alleviate by acquiring Juniper.  C. U.S. Litigation
  1.Goldstein v. National Collegiate Athletic Association, Case No. 3:25-00027 (M.D. Ga. Feb. 20, 2025). On Feb. 20, 2025, the Honorable Judge Tilman E. Self III denied a college baseball player’s request for a temporary restraining order that would have prevented the National Collegiate Athletic Association (NCAA) from barring the student from the 2025 baseball season. The plaintiff filed a suit earlier this month that joins other similar suits seeking to invalidate the NCAA’s eligibility rule which gives college athletes no more than five years to play four seasons of college sports. In denying the temporary restraining order, Judge Tilman scheduled a follow-up hearing to allow for a more fulsome evidentiary hearing on a longer injunction.  2.State of Arkansas v. Syngenta Crop Protection AG, Case No. 4:22-cv-01287 (E.D. Ark. Feb. 18, 2025). Federal Judge Brian S. Miller denied two large pesticide manufacturers’ motion to dismiss the State of Arkansas’ lawsuit alleging that the manufacturers conspired to prevent generic pesticides from gaining market entry. In the lawsuit, Arkansas alleges that these manufactures entered into “loyalty programs,” which pay distributers and retailers incentives if they limit or refuse to sell generic crop-protection products whose patents have expired. In allowing the lawsuit to proceed, Judge Miller noted that the State has sufficiently alleged that these loyalty programs foreclose generic competitors from entering the market successfully.  3.Earth’s Healing Inc. v. Shenzhen Smoore Technology Co., Case No. 3:25-cv-01428 (N.D. Cal. Feb. 11, 2025). A Chinese-based vape manufacturing company and its U.S.-based distributors were sued in a putative class action, alleging that the defendants conspired to keep the price of marijuana vaping pens and cartridges high by limiting competition among distributors. The complaint alleges that Shenzhen Smoore Technology forced its distributors to enter into a horizontal conspiracy not to solicit each other’s retail customers and report any distributor who violated this non-solicitation policy. The proposed class includes any licensed cannabis business in the 24 states that have legalized marijuana for recreational use that have sold Shenzhen’s products since November 2016.  4.Alliance of Automotive Innovation v. Campbell, Case No. 1:20-CV-12090 (D. Mass. Feb. 11, 2025). On Feb. 11, 2025, the Honorable Judge Denise L. Casper dismissed a lawsuit an automakers’ advocacy group brought that sought to block the State of Massachusetts’s “right-to-repair,” which allows customers and mechanics open access to vehicles’ “telematics” systems. These systems are used to electronically track a vehicle’s location, speed, fuel efficiency, and other metrics. The automakers claimed that applying this state law to automobiles violates the National Traffic and Motor Vehicle Safety Act and the Clean Air Act and raises the risk of impairing the cybersecurity protections installed in these systems. Judge Casper’s order dismissing the case was filed under seal, and the has automakers have already indicated an intent to appeal the decision to the U.S. Court of Appeals for the First Circuit. 
The Netherlands
  A. Dutch Competition Authority (ACM) Dutch commitments decision spotlights ACM’s enforcement policy.
The Authority for Consumers and Markets (ACM) recently closed a cartel investigation into three chiropractic trade associations without imposing sanctions. The investigation concluded after the associations promised not to prohibit their members from offering discounts and free examinations. This decision was intended to promote competition, but critics raised concerns about transparency and the fair treatment of other companies that may have received harsher penalties for similar violations. Critics also pointed out that the ACM appears more reluctant to penalize the healthcare sector, leading to additional questions about its policy’s fairness and consistency.  B. Dutch Court Decision Rotterdam District Court confirms egg purchasing cartel violation.
The Rotterdam District Court confirmed the findings of the ACM against three egg-product manufacturers who were fined for price-fixing, supplier allocation, and sharing competitively sensitive information in the egg-purchasing market. In 2021, the ACM sent a statement of objections, concluding that the three companies had violated the cartel prohibition provisions of Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) and Article 6(1) of the Dutch Competition Act. Coordinating purchasing prices leads to such a significant restriction of competition (“by object” violation) that the ACM was not required to analyze the effects of the practice. The court acknowledged the companies’ objections to the amount of the fines and, since the proceedings exceeded the reasonable timeframe by a few weeks, all fines were reduced by EUR 5,000. The court set the fines at EUR 995,000, EUR 7,655,000, and EUR 15,736,500. 
Poland
  A. UOKiK president tightens the noose on price fixing agreements.
The president of the Office of Competition and Consumer Protection continues to focus on alleged price-fixing agreements, in particular those maintaining minimum prices (so-called RPMs) in online sales. Recent proceedings indicate an increased level of scrutiny on pricing practices, particularly around online distribution.  1.Fines imposed on pet-food distributor, Empire Brands. The UOKiK president has imposed a fine on Empire Brands, a pet food distributor, for engaging in resale price maintenance practices in online sales channels (online stores and digital marketplaces). Resellers were required to set prices that were at least equal to those Empire Brands offered in its own online store. According to the UOKIK president, the company penalized resellers by sending warnings, altering payment terms, restricting access to promotions, and terminating business relationships. Following the investigation, the UOKiK president imposed a fine of approximately PLN 353,000 (approximately EUR 84,000/USD 87,000) on Empire Brands. In addition, the UOKIK president also penalized the company’s managers, who received individual fines of PLN 82,000 (approximately EUR 20,000/USD 20,000) and PLN 39,000 (approximately EUR 9,000/USD 10,000), respectively.  2.Charges brought against sanitary equipment distributor, Oltens. UOKiK president also announced charges against Oltens, a distributor of sanitary equipment, for allegedly fixing online resale prices. The UOKiK president suspects that Oltens has entered into a price-fixing agreement with independent resellers of its products. The company allegedly imposed minimum resale prices for online sales, preventing retailers from offering lower prices (including within promotional campaigns). According to the UOKIK president, Oltens may have ensured compliance by actively monitoring resellers and intervening against those who deviated from set prices, including by refusing to supply or terminating cooperation agreements. The proceedings are pending.  3.Trend of enforcement. The Oltens and Empire Brands cases add to a growing list of resale price maintenance investigations the UOKiK president has conducted. In recent years, the competition authority has taken similar actions against multiple companies. For example, in 2024, Dahua Technology was fined PLN 3.7 million (approximately EUR 900,000/USD 900,000) for restricting the pricing policies of its distributors, and Kia Polska was fined PLN 3.5 million (approximately EUR 800,000/USD 900,000) for imposing minimum resale prices on its dealers. The UOKiK president considers RPMs to be particularly harmful to competition, given their capacity to restrict freedom of establishing prices, therefore negatively affecting market competitiveness and consumer interests. Infringing companies may be subject to significant financial penalties, which can be up to 10% of their annual turnover. The UOKiK president may also impose individual fines on managers of up to PLN 2 million. Moreover, anticompetitive contractual provisions would be void, and affected entities can seek damages in civil courts. 
Italy
  A. Italian Competition Authority (ICA)  1.Mulpor and IBCM fined for repeatedly failing to comply with ICA ruling. In January 2025, ICA fined Mulpor Company S.r.l. and International Business Convention Management Ltd. (IBCM) EUR 3.5 million for repeated non-compliance with a 2019 prohibition decision on unfair trading. In ICA’s view, the two companies sent allegedly deceptive communications to businesses and micro-companies, under the pretext of requesting business data verification, while in fact leading recipients to enter into multi-year contracts for advertising services. ICA considered these communications, resembling those that led to earlier fines in 2019 and 2021, to be disguised as updates to a database called the “International Fairs Directory.” But by signing the forms, business and micro-companies committed to a three-year advertising contract.
ICA concluded that these communications were deceptive, causing recipients to unknowingly subscribe to unwanted services. IBCM also allegedly used undue pressure by threatening legal actions to collect payments for the unsolicited services.  2.Radiotaxi 3570 fined for repeatedly failing to comply with ICA ruling. ICA imposed an approximately EUR 140,000 fine on Radiotaxi 3570 for repeated non-compliance with a June 2018 ruling, which found certain agreements in Rome’s taxi service market to be anticompetitive. According to ICA, the company failed to eliminate allegedly restrictive non-compete clauses in its statutes and regulations that ICA believed hindered competition. Radiotaxi 3570 did not comply with the measures ICA required, including submitting a written report outlining corrective actions, nor did it pay the imposed fines. ICA is considering imposing further penalties, including daily fines, and may consider suspending the company’s operations for up to 30 days in the event of persistent non-compliance.  3.Redetermination of Imballaggi Piemontesi S.r.l.’s cartel penalty. In 2019, Imballaggi Piemontesi S.r.l. was fined more than EUR 6 million for its participation in an anti-competitive cartel in the industry that produces and markets corrugated cardboard sheets. In 2023, after a Council of State ICA judgment– which involved a EU Court of Justice referral for a preliminary ruling on that matter (C-588/24) – ICA had to reassess the fine imposed on Imballaggi Piemontesi S.r.l. on the basis, inter alia, of the effective involvement in the cartel.
The company argued for a reduced penalty, but ICA determined that its participation was to be considered “full” in any case. As a result, ICA maintained the fine at EUR 6 million, which was equal to 10% of the company’s total turnover, within the legal limit. 
European Union
  A. European Commission Commission sends Lufthansa supplementary statement of objections.
The European Commission has issued a supplementary statement of objections to Lufthansa, ordering the airline to restore Condor’s access to Lufthansa’s feed traffic to and from Frankfurt Airport as agreed in June 2024. This step follows an investigation into potential competition restrictions by Lufthansa’s transatlantic joint venture with other airlines. The European Commission has preliminarily assessed that this joint venture restricts competition on the Frankfurt-New York route and that interim measures are needed to prevent harm to competition on this market.
Previously, Lufthansa and Condor had special prorate agreements (SPAs) allowing Condor to access Lufthansa’s short-haul network to feed its long-haul flights. In 2020, Lufthansa notified Condor of the termination of their SPAs. The European Commission expressed preliminary concerns that without these agreements, Condor could struggle to operate sustainably on the Frankfurt-New York route, further undermining the competitive market structure. To ensure the effectiveness of any future decision, Lufthansa must reinstate the previous agreements. This case falls under Articles 101 of the TFEU and 53 of the EEA Agreement, which prohibit agreements that restrict competition.  B. ECJ Decisions
  1.CJEU addresses preliminary questions on the restrictive nature of technical specifications. The Court of Justice of the European Union (CJEU) ruled on the interpretation of Article 42 of the EU’s Public Procurement Directive (Directive 2014/24/EU) regarding technical specifications for public procurement. The case involves a dispute between DYKA Plastics, which produces plastic drainage pipes, and Fluvius, the Belgian grid operator for electricity and natural gas in all municipalities in Flanders. Fluvius required that only drainage pipes made of stoneware and concrete can be used. DYKA argued that this requirement violates the principles of procurement, leading to four preliminary questions addressed to the CJEU.
The CJEU ruled that technical specifications must describe the characteristics of the works, supplies, or services, and that contracting authorities may not make specific mentions of materials—like references to stoneware or concrete—that favor or eliminate certain companies. The CJEU also explained that unless the use of a specific material is unavoidable, references to that material must be accompanied by the words “or equivalent.” In conclusion, the CJEU stated that eliminating companies or products through incompatible technical specifications necessarily conflicts with the obligation to provide equal access to procurement procedures and not to restrict competition per Article 42 of Directive 2014/24.  2.Beevers Kaas BV v. Albert Heijn België NV raises preliminary questions about parallel obligation. The case involves a dispute between Beevers Kaas, the exclusive distributor of branded dairy products in Belgium and Luxembourg, and Albert Heijn, a distributor in other markets. Beevers Kaas alleges that Albert Heijn violated exclusivity arrangements by selling in Belgium, while Albert Heijn argues that it cannot be prohibited from actively selling and that the exclusivity agreement offers insufficient protection. The case was referred to the CJEU to address the application of Article 4(b)(i) of the former EU Vertical Block Exemption Regulation (Regulation (EU) 330/2010 – old VBER), which has since been replaced.
First, the CJEU asked whether the “parallel obligation” requirement (where a supplier granting exclusivity to one buyer in a territory must also restrict other buyers from actively selling in that territory) may be fulfilled merely by observing that other buyers are not actively selling in the exclusive territory. Advocate General Medina’s January 2025 opinion states that the mere observation that other purchasers are not actively selling in the area is insufficient.
Second, the CJEU was asked to clarify whether proof of compliance with the “parallel obligation” must be maintained throughout the entire applicable period, or only when other purchasers show their intent to sell actively. According to Advocate General Medina, the supplier must generally demonstrate that the parallel obligation is fulfilled for all its other buyers within the EEA during the entire period for which it claims the benefit of the block exemption. 
Japan
  A. JFTC orders mechanical parking garage manufacturers to pay a surcharge of approximately JPY 520 million for bid-rigging allegations. In December 2024, the Japan Fair Trade Commission (JFTC) issued cease-and-desist orders to five manufacturers of mechanical parking garages and other facilities for bid-rigging allegations. The JFTC also ordered four manufacturers to pay a surcharge of approximately JPY 520 million in total.
According to the JFTC, the manufacturers repeatedly engaged in bid-rigging to determine which companies would receive orders from major general contractors, and at what price. The manufacturers are suspected to have engaged in bid-rigging, but one of them is also suspected of avoiding JFTC orders under the leniency program. The JFTC sent the proposed disciplinary measures to the manufacturers and will issue an order after receiving feedback from each.  B .JFTC issues cease-and-desist orders to a cloud services company for the first time. In December 2024, the JFTC issued a cease-and-desist order to MC Data Plus, Inc., a company providing cloud services regarding labor management, for unfair trade practices that allegedly prevented customers from switching to other companies’ services. The order comes after the JFTC conducted an on-site inspection of MC Data Plus in October 2023.
According to the JFTC, starting in 2020, MC Data Plus refused to provide its clients with information on their employees, which the client registers on the cloud, in a form compatible with other labor safety services, due to the protection of personal information. The JFTC determined that such an act falls under the category of “interference with transactions (unjustly interfering with a transaction between its competitor),” which Japanese antimonopoly law prohibits.
This is the first time that a cease-and-desist order has been issued in connection with transactions regarding cloud services. MC Data Plus has filed a lawsuit to have the order revoked and has also filed a petition to suspend the order’s execution. 
1 Due to the terms of GT’s retention by certain of its clients, these summaries may not include developments relating to matters involving those clients.

The Uncertainty Of Officer Appointments In California LLCs

The California Revised Uniform Limited Liability Company Act, Cal. Corp. Code § 17701.01 et seq., clearly authorizes the appointment of officers:
A written operating agreement may provide for the appointment of officers, including, but not limited to, a chairperson or a president, or both a chairperson and a president, a secretary, a chief financial officer, and any other officers with the titles, powers, and duties as shall be specified in the articles of organization or operating agreement or as determined by the managers or members. An officer may, but does not need to, be a member or manager of the limited liability company, and any number of offices may be held by the same person.

Cal. Corp. Code § 17704.07(u). The CARULLCA even makes provision for the method of the appointment of officers:
Officers, if any, shall be appointed in accordance with the written operating agreement or, if no such provision is made in the operating agreement, any officers shall be appointed by the managers and shall serve at the pleasure of the managers, subject to the rights, if any, of an officer under any contract of employment. 

Cal. Corp. Code § 17704.07(v). The use of the plural “managers” suggests that an individual manager does not have the authority. But if an individual manager lacks the authority, what vote is required? The statute is conspicuously silent on this question. Notably, the statute does not use the defined term “majority of the managers”, which unless otherwise provided in the operating agreement, means more than 50% of the managers of the limited liability company. Cal. Corp. Code § 17701.02(l).
These questions can be easily avoided, by answering them in the operating agreement.

Delaware Court of Chancery Reminds Delaware Counsel of the Court’s Expectations

The Delaware Court of Chancery is the nation’s preeminent business court due to the large number of businesses that call Delaware home. Both Delaware state and federal courts require Delaware counsel to be actively involved in all aspects of the case. For example, Delaware Court of Chancery Practice Guidelines state that “The concept of ‘local counsel’ whose role is limited to administrative or ministerial matters has no place in the Court of Chancery. The Delaware lawyers who appear in a case are responsible to the Court for the case and its presentation.” While these guidelines are a good start, clients who find themselves in this Court should rely on local counsel for expectations related to Delaware practice that will not be found within the Guidelines.
An example of this unwritten guideline is a Delaware practice touchstone—civility. Clients unfamiliar with Delaware should be aware that although zealous litigation is expected, the Court will not tolerate a deviation from the Delaware practice of civility. The head of the Court of Chancery recently reminded parties in a letter filed on the docket to both parties of the Court’s expectations. In In re SwervePay Holdings Acquisition, LLC, C.A. No. 2021-0447-KSJM, Chancellor McCormick reminded the Parties:
You all have been less than understanding with each other, and that is regrettable. You can do better. Dig deep and hit reset, please. Allow the Delaware attorneys to advise on all aspects of this matter, including the relevant deadlines, the need to meet them, and the need to extend basic courtesies like brief extensions when requested. I am not sure what happened in these circumstances, but it also bears reminding that non-Delaware attorneys should not dump a brief on their Delaware friends at the last minute. If that admonition is irrelevant to the parties here, all the better.

The Court of Chancery has had a steady increase in expedited actions, which leaves little patience for the Court’s involvement in trivial scheduling or discovery disputes. According to the most recent Court of Chancery Annual Report of the Judiciary, the request for expedition increased 8% and the overall caseload increased 10%.
If your client is in Delaware, rather than run to the Court to work it out for you, the parties should work it out when possible. Delaware is not a jurisdiction for gamesmanship, especially in the Court of Chancery where your fact-finder is the Chancellor or Vice Chancellor, as there are no jury trials in the Court of Chancery.
Make sure you keep local counsel actively involved, as they can advise on best practices in the Delaware Court of Chancery.

EU Omnibus Package: Proposed Changes to Reduce ESG Compliance Burdens for Businesses

On 26 February 2025, the European Commission (Commission) published the so-called “EU Omnibus Package” (Proposal). The Proposal aims to reduce the administrative burden for businesses operating in the EU by easing compliance requirements under several key EU environmental, social, and governance (ESG) laws, including the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D). The Proposal must be read against the background of the “Draghi report” on European competitiveness published last year, which urged to reduce the administrative and regulatory burden within the EU, and the Commission’s target to reduce such burden by 25% overall and by at least 35% for SMEs. This GT Alert provides an overview of the most important proposed changes to these regulations.
Key Proposed Changes
Amendments to CSRD

Scope of application for EU companies: The CSRD’s scope of application would be limited to undertakings that have more than at least 1,000 employees and either a net turnover of at least EUR 50 million or a balance sheet total of at least EUR 25 million. In addition, publicly listed small and medium sized undertakings (SMEs) that do not meet these thresholds shall be completely removed from the scope of the CSRD. The Commission estimates that these changes would remove approximately 80% of the current in-scope companies from the scope of the CSRD. Currently, the CSRD still captures all “large” undertakings, being companies which meet two of the three following criteria: (i) average number of employees: 250; (ii) balance sheet total: EUR 25 million; and (iii) net turnover: EUR 50 million, as well as listed SMEs (regardless of their number of employees). 
Scope of application for non-EU companies: The Proposal suggests to significantly increase the threshold for non-EU companies to be subject to reporting requirements under the CSRD. The reporting obligation for non-EU companies shall now only be triggered if the ultimate non-EU parent company has a total turnover in the EU of at least EUR 450 million at group level (now: EUR 150 million) and either a “large” EU-based subsidiary (meeting two out of three criteria referred to above) or a branch in the EU with a turnover of at least EUR 50 million (now: EUR 40 million). The employee threshold was not raised to 1,000 for EU subsidiaries of non-EU parent companies, which may have been an oversight. 
Scope of reporting requirements: The scope of the reporting requirements set out in the European Sustainability Reporting Standards (ESRS) shall be simplified through a reduction of the number of data points to be reported in the CSRD report. The Proposal also removes the obligation for the European Commission to adopt delegated acts to supplement CSRD in order to, where appropriate, provide for reasonable assurance standards. This would mean that CSRD would, also in the future, only require an audit opinion about the compliance of the sustainability reporting based on limited assurance standards. 
Timing of reporting: The Proposal suggests postponing the CSRD reporting requirements by two years for all so-called “wave 2” and “wave 3″ companies, i.e. companies which are currently required to report under the CSRD in 2026 (over the financial year 2025) or 2027 (over the financial year 2026). If the Proposal is adopted, these companies would only have to provide their first CSRD report in 2028 and 2029, respectively. On the contrary, the Proposal does not change the timing of the reporting for so-called “wave 1” companies (i.e. publicly listed EU companies, insurances and banks with an average number of employees during the financial year of at least 500) which are already required to do CSRD reporting in 2025 (for the financial year 2024). The Commission intends to fast-track this part of the Proposal to provide legal certainty for companies with looming reporting obligations in 2026, and to “win time” for adoption of the envisaged substantive changes (in particular the introduction of the 1,000-employee threshold). Should the substantive changes be adopted and become effective as they currently stand, the “wave 1” companies that do not meet the new scoping criteria (because they have more than 500 but less than 1,000 employees) would no longer be subject to the CSRD.

Amendments to CS3D

Timing of due diligence obligations: The Proposal leaves the thresholds for the applicability of the CS3D unchanged but proposes to postpone the deadline for Member States to transpose the CS3D into national law by one year to 26 July 2027. Consequently, the first phase of application of the new due diligence obligations (i.e. for large companies) would begin on 26 July 2028. 
General limitation of due diligence obligations to direct business partners: The Proposal generally limits the due diligence obligations of in-scope companies to direct business partners. An exception (i.e. an obligation to conduct an in-depth assessment of adverse impacts at the level of indirect business partners) shall only apply in limited circumstances where the company has plausible information suggesting that adverse impacts have arisen or may arise at the level of the respective indirect business partner. Hence, it would no longer be required to monitor and assess the entire supply chain. 
Greater intervals for monitoring: As another significant relief for in-scope companies, the Proposal suggests requiring companies to assess the adequacy of their supply chain due diligence measures only every five years instead of every 12 months. 
Termination of business relationships: Under the Proposal, in-scope companies would no longer be required to terminate their entire business relationship with business partners towards which preventive or corrective measures have failed to address their adverse impacts on human rights or environmental objectives. Instead, they would only be required to terminate business relationships with respect to the activities concerned.

Other Proposals
The Proposal also includes:

measures to reduce the regulatory burden and scope of the Taxonomy Regulation, including by introducing materiality thresholds and reducing reporting templates by around 70%; 
changes to the Carbon Border Adjustment Mechanism (CBAM), including by exempting small importers from CBAM obligations; and 
an amendment to the InvestEU Regulation, involving reduced reporting requirements.

Outlook
It remains to be seen whether the Proposal will become law in its current form. It is still subject to approval by the European Parliament and the Council of the EU Member States. Generally, EU legislative procedures can last up to 18 months – which is why the Commission has asked to fast-track the changes, in particular regarding the postponement of CSRD deadlines.
Whilst some EU politicians have raised concerns that the Proposal would lead to a setback for the EU’s sustainability objectives, the Proposal would significantly reduce the compliance burden for companies and limit the CSRD’s scope of application. For this reason, the Proposal has found support in some key EU Member States (e.g. Germany). Further intense discussions can be expected as the legislative procedure moves along.
Considerations for Companies
Until the Proposal becomes final and is adopted, the existing ESG rules (including CSRD) will continue to apply. What steps should companies consider taking before then? In particular for the CSRD, the answer depends on the circumstances for each company:

Companies that are already required to report under CSRD (“wave 1” entities) in 2025 should continue to comply. Companies with more than 500 but less than 1,000 employees may no longer be required to comply after adoption of final rules, but whether those rules will indeed become effective in their current form remains to be seen. 
For companies that are currently due to report under CSRD in 2026 and 2027 (“wave 2” and “wave 3” entities), the prudent approach is to continue preparing for CSRD on the basis of the existing rules. 
Non-EU parent companies of EU subsidiaries or branches should reconsider applicability of the scope to determine whether they will be required to report in 2029.

All companies are advised to monitor the development of upcoming rules.

What Doesn’t The DFPI Regulate?

In the mid 1990s, I had the privilege of serving as Commissioner of Corporations for the State of California. At that time, the DOC was known as a tough securities regulator. However, the times they were a changin’. In 1996, Congress enacted the National Securities Markets Improvement Act (NSMIA) which significantly limits the authority of the states to require qualification/registration of securities transactions. 
During my tenure, the DOC also regulated health care service plans (aka HMOs and PPOs). Historically, these had been primarily nonprofit organizations and the regulatory concern had been with financial soundness. At the time many of these plans were converting to for profit. At the same time, many people were being moved into a managed care model and there was a great deal of public antipathy towards the managed care industry and the DOC’s oversight of that industry. Several years after I left the DOC, the legislature transferred oversight of managed care organizations to a new department – the Department of Managed Healthcare.
During my years in state government, regulation of state chartered financial institution was trifurcated amongst the DOC, the State Banking Department, and the Department of Savings & Loan (before becoming Commission of Corporations, I served as the interim Savings & Loan Commissioner). A significant change occurred on July 1, 2013, when the DOC and the Department of Financial Institutions (DFI) merged to form the Department of Business Oversight (the DBO). As a result, regulation of state chartered depository financial institutions became centralized in the DFI.
In 2021, the Governor and the legislature made the unfortunate decision to rebrand the DFI with the ungainly moniker of Department of Financial Protection and Innovation (DFPI). Currently the DFPI administers and/or enforces the following:
Banks and Credit Unions

Commercial Banks
Industrial Banks
Public Banks (Assembly Bill 857)
Credit Unions
Trust Companies & Departments

Securities and Investment

Securities (Corporate Securities Law of 1968)
Franchises (Franchise Investment Law)
Capital for Businesses (Capital Access Company Law)
Broker-Dealers & Investment Advisers (Corporate Securities Law of 1968)
Digital Financial Assets (Digital Financial Assets Law)

Non-Bank Financial Services

Money Transmitters
Debt Collectors
Check Sellers, Bill Payers & Proraters
Covered Persons (California Consumer Financial Protection Law )

Lending and Borrowing

Consumer & Commercial Loans (California Financing Law)
Payday Lenders (California Deferred Deposit Transaction Law)
Insurance Premium Finance (California Industrial Loan Law)

Home and Property Financing

Residential Mortgage Lenders & Servicers (California Residential Mortgage Lending Act)
Mortgage Loan Originators (California Financing Law and California Residential Mortgage Lending Act)
 Property Assessed Clean Energy (PACE) (AB 1284 (Chapter 475, Statutes of 2017)

Escrow Agents

Escrow Agents (Escrow Law)

Education Financing

Student Loan Servicers (California Student Loan Servicing Act and subsequent enactments)