Ch-ch-ch-ch-changes… Part 2
In our earlier blog on recent changes affecting the Competition and Markets Authority (CMA), we anticipated more changes to come. The month of March has lived up to our expectations. On 12 March, the CMA launched a “call for evidence” for the review of its approach to merger remedies as well as a “Mergers Charter” for businesses, stating that:
“Both the merger remedies review and the Mergers Charter are part of the CMA’s programme of work to implement the ‘4Ps’ – pace, predictability, proportionality and process – across all its work, helping to drive growth and enhance business and investor confidence.”[1]
The Mergers Charter[2]
The charter sets out principles as well as expectations for how the CMA will interact with businesses as well as their advisers during merger reviews – but also how the CMA expects businesses to act in return.
While carrying out merger reviews, the CMA is committed to four principles: process, proportionality, pace and predictability.
These principles are meant to help the CMA ensure they reach the correct decisions, as quickly as possible, while minimising the burden on businesses.
The “charter is a statement of intent”, but the document itself has no legal status.
In relation to the 4P’s, the following is said:
Pace – “The CMA is committed to reaching sound decisions as quickly as possible. Cooperation of businesses is a vital part of this process.”
Predictability –“Predictability is important for investor confidence and business decision-making. This includes being as clear as we can be to minimise uncertainty over whether we will review a particular deal or not.”
Proportionality – “The CMA is committed to acting proportionately in the conduct of its merger reviews.”
Process– “The CMA is committed to engaging directly with businesses during its merger reviews … Open and constructive engagement is a crucial part of this.”
The Call for Evidence[3]
This call for evidence will remain open until 12 May 2025.
“The CMA is seeking feedback on 3 key areas:
How the CMA approaches remedies, including the circumstances in which a behavioural remedy may be appropriate.
How remedies can be used to preserve any pro-competitive effects of a merger and other customer benefits.
How the process of assessing remedies can be made as quick and efficient as possible.”
Additionally, the CMA will also be running a series of outreach and roundtable sessions to gather input.
As Joel Bamford (executive director for mergers at the CMA) has stated:
“Casting the net widely for input for the merger remedies review is crucial to getting a range of views – to this end we’re going to be holding webinars and hosting roundtables so we’re gathering the best quality feedback directly from those impacted by UK merger control.”
“We’re moving rapidly to deliver on our commitment to update the UK’s mergers regime, focusing on pace, predictability, proportionality and process. The remedies review and charter represent crucial progress as we turn those principles into practice.”[4]
Sarah Cardell Speech[5]
Around the same time of the announcement of this call for evidence, a recent speech from Sarah Cardell (the CMA chief executive) also highlighted a paced and proportionate approach to two areas of focus for the CMA’s new consumer protection powers under the Digital Markets, Competition and Consumers Act 2024 (DMCCA): drip pricing and fake reviews.
Fake Reviews
The CMA confirmed that it is ready to take action against fake reviews under the new regime. However, Sarah Cardell went on to say:
“Although we can tackle fake reviews under our existing powers … we recognise that new provisions may require changes to systems and compliance programmes … so for the first 3 months of the new regime we will focus on supporting businesses with their compliance efforts rather than enforcement.”
Drip Pricing
In relation to drip pricing, Sarah Cardell mentioned how:
“I am announcing today that we will take a phased approach to the guidance here. In April, we will provide a clear framework for complying with the parts of the law which are already well understood and largely unchanged … These ‘dripped fees’ harm consumers, and fair dealing businesses, by hindering effective price competition – which we know primarily happens on headline prices.”
Conclusion
The CMA continues to adapt its approach in response to the UK government’s steer towards growth. Business should reflect how to adapt to these changes in turn, and the call for evidence provides a first opportunity for businesses to help the CMA put its 4P’s principles into practice.
[1] CMA launches review of merger remedies approach and publishes new mergers charter – GOV.UK
[2] Mergers charter – GOV.UK
[3] CMA launches review of merger remedies approach and publishes new mergers charter – GOV.UK
[4] CMA launches review of merger remedies approach and publishes new mergers charter – GOV.UK
[5] Promoting competition and protecting consumers in the digital age: a roadmap for growth – GOV.UK
A Delay in Exit Plans
There was much hope going into 2025 that we would see a rebound in the IPO market after a bit of a drought over the past few years. We left the uncertainty of the election behind us, and good news on the inflation and interest rate fronts were fueling a sense of hope that 2025 was going to be a great year for the IPO market. However, at almost three months into the new year, it is looking like that rebound might be delayed a little longer.
The Wall Street Journal reports that the market volatility we are currently seeing is going to make IPO pricing a “monumental challenge,” and the IPO recovery that venture investors have been waiting on is on hold. The market is reacting to the threats of tariffs and a trade war, as well as recent talks of a recession, and the WSJ says this is keeping some companies on the sidelines as they delay their exit plans.
Yahoo! Finance cites data from Dealogic indicating that the total value of US IPOs is up 62%, coming in at $10 billion as of March 11 – almost double the number of deals compared to the same period in 2024. However, this is still well lower than the kinds of numbers we were seeing in the boom of 2021.
There are some companies who have already gone public this year, with six venture backed IPO’s as of mid-March. And there are still some on track, at least as of now, for the second quarter. Klarna and CoreWeave both filed an IPO prospectus this month, but those plans could be derailed if the market continues its roller coaster ride. Others have already put their plans on hold.
And it is not just IPOs that are delayed – mergers & acquisitions (M&A) are also off to an extremely slow start this year despite expectations that there would be more robust activity this year. PitchBook data show that “US M&A volumes in January were the lowest they’ve been in 10 years, and February wasn’t rosy either.” They point to antitrust policy, market turmoil, and “price mismatches” as contributing factors here. The leadership at the DOJ and FTC also remains critical of Big Tech, so many of those players are sitting on the sidelines which has slowed down dealmaking considerably.
Only time will tell how the back and forth on tariffs will play out, but they are certainly having an impact on the market now and could have longer term impacts that further delay exit plans. A recent article in Forbes notes that the “market’s long-term response to tariffs depends largely on adaptability—how quickly companies can adjust supply chains, pass costs to consumers, or find alternative markets.” But how quickly companies can pivot remains to be seen, and timing will be critical for market stability and for transactions to resume.
There is certainly still hope that successful trade negotiations could end this tariff battle, but there are still fears about the current state of the economy and the potential for a recession. The world is watching closely to see how all of this shakes out, as is everyone sitting on the sidelines planning their next move.
Given that the pre-IPO planning process can be lengthy, and we know that better planning leads to better performance (and that lack of planning leads to poor results), companies and financial sponsors should be getting their ducks in a row for an anticipated IPO market window opening soon, perhaps as early as May 2025.
Recovering Attorneys’ Fees in Connection with Termination Settlement Proposals
When a government contract is terminated for convenience, contractors may find themselves navigating the complex process of preparing a termination settlement proposal. One critical consideration that often arises is whether the costs associated with hiring legal counsel to assist with the preparation of these proposals are recoverable from the government. The good news for contractors is that, in many cases, attorneys’ fees related to the preparation of a termination settlement proposal are indeed recoverable.
The Legal Basis for Recoverability
The Federal Acquisition Regulation (FAR) provides guidance on cost allowability when it comes to termination settlements. FAR 31.205-42 specifically addresses termination settlement costs, providing that settlement expenses, including the following, are generally allowable:
Accounting, legal, clerical, and similar costs reasonably necessary for –
(A) The preparation and presentation, including supporting data, of settlement claims to the contracting officer; and
(B) The termination and settlement of subcontracts.
Additionally, FAR 31.205-33 addresses the allowability of professional and consultant service costs, including legal fees, and generally allows for the recovery of such fees when they are reasonable and allocable.
The Armed Services Board of Contract Appeals (ASBCA) and the Civilian Board of Contract Appeals (CBCA) have consistently upheld that legal fees incurred in the preparation and negotiation of termination settlement proposals are recoverable, provided they meet the standards of reasonableness and allocability. Courts have recognized that contractors often require the assistance of legal professionals to navigate the intricate requirements associated with settlement proposals, especially when large sums or complex contract terms are involved.
Demonstrating Reasonableness and Allocability
To ensure recovery, contractors generally should demonstrate that attorneys’ fees were both reasonable and necessary for the preparation of the termination settlement proposal. Factors considered in determining reasonableness include the complexity of the proposal, the qualifications of the attorney, and the time spent on the preparation. Allocability requires showing that the costs are directly linked to the contract termination and not for unrelated purposes.
Practical Tips for Contractors
Consult Early – Involve legal counsel early in the process to ensure compliance with FAR requirements and to maximize the likelihood of recovery.
Document Legal Involvement – Maintain detailed records of the attorney’s contributions to the termination settlement proposal to demonstrate their necessity.
Justify the Reasonableness – Be prepared to show that the rates charged, and the hours billed, are customary and appropriate for the services rendered.
Conclusion
Recovering attorneys’ fees related to the preparation of termination settlement proposals is a crucial consideration for contractors facing contract termination. By carefully documenting expenses and demonstrating reasonableness and allocability, contractors can enhance their chances of obtaining reimbursement from the government.
Unclaimed Property Laws and the Health Industry: Square Peg, Round Hole
Likely due to the tremendous number of healthcare mergers, acquisitions, and private equity deals that have been taking place, the industry has recently been the target of multistate unclaimed property audits. This increased scrutiny has highlighted many of the complexities and tensions that exist in this space. At almost every stage of the process, healthcare industry holders are pressured by state unclaimed property auditors and administrators to fit a square peg in a round hole – something both they and their advocates should continue to vigorously push back against.
Determining whether any “property” exists to report in the first instance can be a daunting task in an industry where multiple parties are involved in a single patient transaction that is documented by complex business arrangements between sophisticated parties, which are updated and accounted for on a rolling basis. Unclaimed property audits are conducted in a vacuum of one single holder and use standard document requests that were developed to apply to all businesses, creating unrealistic record retention and management expectations that almost never neatly align with healthcare industry laws or practices.
Making matters worse, unclaimed property auditors and voluntary disclosure agreement (VDA) administrators frequently do not have a detailed understanding of the complex healthcare privacy, billing, and payment practices, yet these practices materially impact how providers manage unclaimed property and when they report it. Getting them up to speed on these laws, practices, and procedures can be very time-consuming. For example, providers or their advisors may need to explain to auditors what HIPAA is or what prompt pay laws are. Many of the payments in this space are managed or funded by the US government, resulting in federal preemption of a state’s ability to demand at least some portion of the funds a review is likely to identify. And while some of the larger healthcare providers and payors have detailed records for more recent periods, the degree of detail requested by the auditors is frequently unreasonable (in both time and scope) and can result in sampling, extrapolation, and grossly overstated audit results.
This article explores some of the unclaimed property law tensions and legal risks that exist for healthcare providers of all sizes.
COMMON PROPERTY TYPES
Some common property types at risk of exposure in the healthcare industry include patient credit balances, accounts payable checks, payroll checks, refund checks, and voided checks. These risk areas can result in unclaimed credit balances for varying reasons, such as overpayment and payment of the same bill by multiple sources. Healthcare providers and insurance companies periodically engage in settlement audits to resolve open items. However, a healthcare provider may make adjustments and write-offs to accounts receivable arising from a settlement, thus creating tension with the statutory anti-limitation provisions of unclaimed property law.
FEDERAL PREEMPTION
Although all 50 states and the District of Columbia have enacted unclaimed property laws, federal laws may preempt their ability to exert jurisdiction and regulate certain (otherwise) unclaimed property. Federal preemption can often be raised as a defense in the healthcare industry where federal law robustly governs the space (such as Medicare) or conflicts with state unclaimed property laws. For example, these defenses can be raised when federal law either establishes or abrogates property rights, claim obligations, and periods of limitation.
PROMPT PAY STATUTES AND RECOUPMENT
Prompt pay statutes are generally designed to ensure that physicians and medical providers are recovering their payment claims with insurance providers in a timely manner. Most states contain laws that typically include (1) a period in which claims are required to be processed, (2) types of claims covered, and (3) penalties for failure to comply. The statutes’ deadlines for making payments typically range from 15 to 60 days, depending on the state. Moreover, recoupment provisions in many states provide that refunds of paid claims by insurers are barred after the expiration of a specific period of time from the date of payment. Under these provisions, insurers cannot avoid this requirement via their contracts with the provider. Individual state statutes will render different results related to the coordination of benefits for federally funded plans such that there is either no recoupment period or a longer one. The finer details of prompt pay and recoupment statutes are important for states and their auditors to understand and, if not properly accounted for in an audit or VDA, can lead to vastly overstated results.
BUSINESS-TO-BUSINESS EXEMPTION
Some states exempt business-to-business payments and/or credit due from unclaimed property reporting. The scope of these exemptions can vary widely and sometimes contain traps for the unwary, requiring careful review before they are broadly implemented into a provider’s reporting process. In many states, there are viable defenses to unclaimed property audit assessments seeking payor funds held by a provider.
REVENUE RECOGNITION BASED ON CONTRACT
Contractual allowance adjustments and accounts receivable credit reclasses in the contractual allowance account can give the appearance of unclaimed property if not resolved timely, accurately, and with the appropriate supporting documentation. Examples of accounts that can give rise to potential unclaimed property credits include expired or outdated contracts between a healthcare provider and insurance company, unaccounted contract revisions or adjustments, and others that are unique to the healthcare industry to account for the complex flow of funds between patient, provider, and payor.
M&A DEALS
Unclaimed property results can vary significantly based on the terms and type of deal. It is best practice for unclaimed property counsel to be involved in healthcare deals to ensure any potential unclaimed property is accounted for. The typical failure to maintain records in a searchable manner post-acquisition may result in either (1) false positives during the next audit in an address review or (2) a windfall for the state of formation if an estimation is performed. Reviewing key provisions in the agreement when conducting a deal can identify complications that may arise and ensure the parties proactively account for any risk and maintain the records needed.
False Claims Acts
Many state False Claims Acts (FCAs) permit a private party (a relator) with knowledge of past or present underpayments to the government to bring a sealed lawsuit on its behalf. When these suits are successful, the relators receive 15% to 30% of any judgment or settlement recovered, which includes treble damages of the alleged unclaimed property liability and interest, per occurrence penalties, and even costs and attorneys’ fees.
In California ex rel. Nguyen v. U.S. Healthworks, Inc., the plaintiff brought a suit alleging that the failure to report credits as potential overpayments violated California unclaimed property law and the state FCA. The California attorney general filed an unclaimed property complaint in intervention against the healthcare provider, identifying the ongoing failure to comply with state unclaimed property law as a key factor in the attorney general’s decision to pursue the case under California’s FCA before agreeing to settle for $7.7 million in 2023.
Other states, including New York, are actively involved in aggressively enforcing their unclaimed property laws as punitively as possible through state FCAs. The U.S. Healthworks case is a cautionary tale for healthcare providers that have not robustly analyzed their unclaimed property law compliance practices.
Common Privacy Pitfalls in M&A Deals
Many expect that deal activity will increase in 2025. As we approach the end of the first quarter, it is helpful to keep in mind privacy and data security issues that can potentially derail a deal. We discussed this in a webinar last week, where we highlighted issues from the buyer’s perspective. We recap the highlights here:
Take a Smart Start Approach: Often when privacy “specialists” are brought into deals, it is without a clear understanding of the goal of the deal and post-acquisition plans. Keeping these in mind can be crucial to conducting appropriate and risk-based diligence. (Along with having a clear understanding of the structure of the deal.) Questions to ask include the extent to which the target will be integrated into the buyer. Or, whether privacy assets (mailing lists) are important to the deal.
Conducting Diligence: Diligence can happen on a piece-meal basis. There are facts about the target that can be discovered even before the data room opens. What information has it shared about operations and products on its website? Has there been significant press? Any publicly-announced data breaches? What about privacy or data security related litigation? When submitting diligence question lists, keep the scope of the deal in mind. What are priority items that can be gathered, and how can that be done without overwhelming the target?
Pre-Closing Considerations: There are some obvious things that will need to happen before closing, like reviewing and finalizing deal documents and schedules. There may also be privacy-specific issues, such as addressing potential impediments to personal information transfers.
Post-Closing Integration: In many deals, the privacy and cybersecurity team is not involved in the integration process. Or, a different team handles these steps. Issues that might arise- and can be anticipated during the deal process- include understanding the data and processes that will be needed post integration, and the personnel who can help (whether at the target or buyer).
Putting It Into Practice: Keeping track of the intent of the deal and the key risks can help the deal flow more smoothly. This checklist can help with your next transaction.
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.
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.
SEC Division of Corporation Finance Expands Confidential Review Accommodations for Draft Registration Statements
On March 3, 2025, the staff of the Securities and Exchange Commission’s (SEC) Division of Corporation Finance (the Division) announced that it enhanced certain existing accommodations under the Jumpstart Our Business Startups Act, which was enacted in April 2012 and which accommodations were expanded in 2012 and 2017, that allow for confidential SEC review of certain draft registration statements by expanding the availability of certain general accommodations and by including additional accommodations for companies that have gone public but have not yet achieved “Well-Known Seasoned Issuer” (WKSI) status.1
Following Monday’s announcement, issuers will now be able to submit all of the following draft registration statements for nonpublic review:
a registration statement under the Securities Act of 1933, as amended, for an initial public offering of securities or for any subsequent public offering of securities, regardless of how much time has passed since the initial public offering (rather than only up to one year later, as had previously been the case);
a registration statement on Form 10, 20-F or 40-F for the initial registration of any class of securities under either Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the Exchange Act) or any subsequent registration statement for the registration of a class of securities under either Section 12(b) or Section 12(g) of the Exchange Act, regardless of how much time has passed since the issuer became subject to the reporting requirements of the Exchange Act; or
a registration statement for a de-SPAC transaction where the SPAC survives the business combination as the public company and the co-registrant target would otherwise be independently eligible to submit a draft registration statement.2
The new guidance is particularly significant for public companies that have been public for more than a year but have not yet achieved WKSI status, as it permits such companies to continue to confidentially submit draft registration statements indefinitely. As a result, non-WKSI’s may now avoid suffering the market pressure associated with filing a registration statement publicly and effectively pre-announce a transaction before launch, as was previously required. Moreover, reporting companies may now exclude the name of the underwriter(s) from their initial draft registration statement submissions so long as the company provides such name(s) in subsequent submissions and public filings. Finally, pursuant to the 2017 expansion of accommodations, issuers that confidentially submit a draft registration statement subsequent to their initial registration statement must make such registration statement and nonpublic draft submission publicly available on the EDGAR system at least two business days prior to any requested effective time and date; under the new guidance, however, the staff will now consider reasonable requests to expedite that two-business day period.
In issuing this new guidance, the Division underscored that “further expansion of these accommodations can facilitate capital formation, without diminishing investor protection.”
1 A WKSI is an issuer that meets all of the following obligations at some point during a 60-day period preceding the date the issuer satisfied its obligation to update its shelf registration statement: (i) the issuer is eligible to register a primary offering of its securities on Form S-3 or Form F-3; (ii) as of some date within 60 days of its eligibility determination date, the issuer has an outstanding minimum $700 million in worldwide market value of voting and non-voting equity held by non-affiliates (i.e., public float)– or – has issued at least $1 billion aggregate amount of non-convertible securities other than common equity, in primary offerings for cash in the last three years; and (iii) the issuer is not an ineligible issuer (i.e., an issuer that has not filed all required reports under Section 13 or 15(d) of the Exchange Act in the preceding 12 months; a blank check company; an issuer in an offering of penny stock; or the like). The benefit of WKSI status is automatic effectiveness of registration statements on Form S-3 or F-3, without any SEC review.
2 In essence, this accommodation puts the traditional de-SPAC structure on even footing with alternative de-SPAC structures that already allow confidential submission (i.e., where the target company or a newly formed company is the registrant).
SEC Staff Significantly Shifts Guidance on Impact of Lock-Up Agreements on Business Combinations (Rule 145(a))
KEY TAKEAWAYS
On March 6, 2025, the Staff of the SEC (the “Staff”) changed its guidance regarding the use of “lock-up agreements” and written consents on Rule 145(a) transactions (i.e., certain mergers and other business combination transactions).[1]
The Staff will no longer object to the registration of securities on Form S-4 (or Form F-4) where locked-up target company insiders deliver written consents approving the transaction before the registration statement is filed, subject to specific conditions.
This represents a significant shift of the Staff’s prior position, which had been that the Staff would object to subsequent registration on Form S-4 (or Form F-4) if lock-up agreements and written consents had been delivered before filing (typically at the signing of the merger agreement).
The updated guidance also requires that all security holders entitled to vote on the transaction receive a prospectus.
ANALYSIS
Background
In the context of business combination transactions covered by Rule 145(a) under the Securities Act of 1933, as amended (the “Securities Act”), the acquiring company typically seeks “lock-up agreements” from management and principal security holders of the target company committing them to vote in favor of the transaction. The execution of such agreements in a stock-for-stock merger may constitute an investment decision under the Securities Act, potentially triggering registration requirements. From a practitioner’s perspective, the Staff’s position was problematic because such insiders typically are involved in the transaction and highly knowledgeable about the parties and also because acquirors often want contractual assurance that those insiders will support the transaction in their capacity as stockholders.
Prior Guidance
Previously, the Staff had taken the position that if persons entering into lock-up agreements also delivered written consents approving the transaction before the registration statement on Form S‑4 (or Form F-4) was filed, the Staff would object to the subsequent registration. This objection was based on the rationale that offers and sales had “already been made and completed privately, and once begun privately, the transaction must end privately.”[2] In addition, prior to this update, the guidance did not expressly state that the prospectus be delivered to all security holders entitled to vote on the transaction.
Updated Position
The updated guidance, dated March 6, 2025, reflects a significant shift in the Staff’s approach. The Staff will now not object to the subsequent registration where target company insiders who entered into lock-up agreement have also delivered written consents, provided that:
such insiders will receive securities of the acquiring company only in an offering made pursuant to a valid Securities Act exemption; and
the securities registered on Form S-4 (or Form F-4) will be offered and sold only to those who did not deliver such written consents.
This change allows stock-for-stock mergers and similar transactions to proceed with a combination of exempt offerings (for insiders who provided consents) and registered offerings (for other security holders).
The update also adds a prospectus-delivery requirement to the list of conditions that must be met when lock-up agreements are used.
Conditions for No-Objection When Lock-Up Agreements Are Used
The Staff continues to recognize the legitimate business reasons for seeking lock-up agreements in Rule 145(a) transactions and will not object to the registration of offers and sales where lock-up agreements have been signed and the following four conditions are met, the fourth of which is entirely new:
the lock-up agreements involve only “target company insiders;”[3]
the locked-up persons collectively own less than 100% of the voting equity securities of the target company;
votes will be solicited from security holders of the target company who have not signed lock-up agreements, if such votes are needed to approve the Rule 145(a) transaction under state or foreign law; and
the acquiring company delivers a prospectus to all security holders of the target company entitled to vote on the Rule 145(a) transaction in accordance with its obligations under the Securities Act.
Practice Implications
This updated guidance provides greater flexibility for structuring business combination transactions covered by Rule 145(a) where target company insiders have provided lock-up agreements and written consents prior to the filing of the registration statement on Form S-4 (or Form F-4). Key practice considerations include:
Two-Track Offering Structure: Companies can now more confidently implement a two-track structure, with exempt offerings for insiders who provide lock-up agreements and written consents and registered offerings for other security holders.
Increased Deal Certainty and Timing Advantages: The updated guidance may provide increased deal certainty and enable shorter transaction timelines by allowing written consents from insiders to be obtained before a Form S-4 (or Form F-4) filing without jeopardizing the ability to register offers and sales to other security holders. This is particularly important in transactions where insiders collectively own a sufficient number of shares to approve the transaction and can act by written consent. Although a prospectus (and, if required, information statement) would still have to be delivered to non-consenting stockholders, the parties can avoid the time associated with holding a stockholders’ meeting. Moreover, from the acquiror’s perspective, it can reduce or effectively eliminate the risk of an interloper or other failure to obtain target stockholder approval.
Disclosure Requirements: The acquiror should ensure that the registration statement clearly discloses the two-track structure, including that insiders who delivered written consents will receive securities through an exempt offering.
Valid Exemption Required: The parties will need to carefully analyze and document the exemption being relied upon for the offers and sales to insiders who provided written consents, as this remains a condition for non-objection by the Staff.
Prospectus Delivery: The acquiring company must still deliver a prospectus to all security holders of the target company entitled to vote on the transaction, including those receiving securities in an exempt offering.
Conclusion
The Staff’s updated guidance provides welcome flexibility for structuring M&A transactions in accordance with Rule 145(a) where insiders have provided lock-up agreements and written consents in connection with the signing of the merger agreement and otherwise prior to the filing of a registration statement. Companies contemplating such transactions should work closely with legal counsel to ensure compliance with all applicable law, including the Securities Act, and rules, regulations and guidance, including that set forth in the updated C&DI Questions 225.10 and 239.13.
[1] SEC Compliance and Disclosure Interpretations, Questions 225.10 and 239.13, updated March 6, 2025.
[2] SEC C&DI Questions 225.10 and 239.13, dated November 26, 2008 (i.e., prior to March 6, 2025).
[3] The term “target company insiders” is defined in Questions 225.10 and 239.13 as executive officers, directors, affiliates, founders and their family members, and holders of 5% or more of the voting equity securities of the target company.
Antitrust Under Trump: Initial Policies and Actions
As the Trump administration’s approach to antitrust takes shape through political appointments, policy statements, speeches, and enforcement actions, our team is tracking new developments and will provide important updates on issues pertinent to clients. This client alert is not intended to be a comprehensive review of specific actions or cases, but rather an at-a-glance review of relevant policies as they are being created.
In Depth
NOMINATIONS AND CONFIRMATIONS
Appointment of Federal Trade Commission (FTC) Chairman
President Donald Trump appointed FTC Commissioner Andrew Ferguson as the new chairman of the FTC on January 20, 2025.
Ferguson views antitrust enforcement as a facilitator of innovation and believes that because markets are not self-correcting, government intervention on behalf of human flourishing and the protection of workers is necessary.
Despite his intention to “reverse” former Chair Lina Khan’s war on mergers and anti-business agenda, Ferguson has expressed concern with the market power of Big Tech and other large companies being leveraged to gain social or political control.
Confirmation Hearing for AAG Nominee Gail Slater
President Donald Trump nominated Gail Slater as the Assistant Attorney General (AAG) of the US Department of Justice’s (DOJ) Antitrust Division on December 4, 2024.
On February 12, 2025, Slater appeared before the Senate Judiciary Committee for her nomination hearing. The committee advanced her nomination on February 27 with a vote of 20-2.
Slater has expressed a desire to continue enforcement actions against Big Tech and to return to using merger remedies in the form of consent decrees and settlements to address competitive harm.
Confirmation Hearing for FTC Commissioner Nominee Mark Meador
President Trump appointed Mark Meador to the FTC on December 10, 2024.
On February 25, 2025, Meador appeared before the Senate Committee on Commerce, Science, and Transportation for his confirmation hearing.
He echoes Slater’s view that pursuit of Big Tech should remain a priority for the agencies, as should combatting noncompete agreements that overly burden workers and prevent employees from leaving to work for a competitor.
GENERAL UPDATES
Musk Supports Consolidating Antitrust Enforcement Agencies
Responding to a comment by Sen. Mike Lee (R-Utah), who expressed hope that the new administration would consider consolidating the FTC and DOJ, Elon Musk said, “Sounds logical,” appearing to agree with the idea.
Lee referenced the One Agency Act, a bill he proposed in 2021 that would strip the FTC of its antitrust authority and transfer it to the DOJ. When discussing the bill, Lee has compared the current two-agency system to having two presidents.
Agencies Keep 2023 Merger Guidelines
FTC Chairman Ferguson and Omeed Assefi, Acting Assistant Attorney General of the DOJ’s Antitrust Division, announced on February 18, 2025, that the FTC and DOJ will continue to use the 2023 Merger Guidelines as the framework for their merger review process.
Ferguson cited the time and expense associated with creating new guidelines, as well as his desire to create stability for the parties and the agencies, as the rationale for adhering to the 2023 Guidelines. He did note that “no Guidelines are perfect” and indicated portions could be revisited later.
Ferguson Supports New Hart-Scott-Rodino (HSR) Rules
FTC Chairman Ferguson expressed his support for the new HSR rules, stating that “updates were long overdue” and would “prevent unlawful deals from slipping through the cracks.”
He has previously stated his approval of the new rules, calling them a “lawful improvement over the status quo” in his concurring statement accompanying the rules’ announcement.
Holyoak Sets Out FTC Goals for New Administration
In remarks at the GCR Live conference on January 30, 2025, FTC Commissioner Melissa Holyoak outlined three areas of focus for antitrust under the Trump administration. She explained that the FTC will focus on (i) making the merger review process better and more predictable, (ii) ensuring that antitrust concerns will not impede artificial intelligence innovation, and (iii) fighting against Big Tech censorship.
In later remarks, Holyoak said that she expects the return of early termination, improving staff communication and transparency with the parties in the merger review process, bringing back remedies as a method of resolving merger issues – as well as continuing enforcement actions against Big Tech – and abandoning FTC rulemaking authority.
Meador Targets Anticompetitive Effects of Vertical Mergers
At his confirmation hearing on February 25, 2025, FTC Commissioner nominee Meador indicated that he would address the consumer welfare issues raised by vertical mergers. He noted that vertical integration can allow for increased prices, a reduction in quality, and market foreclosure. He went onto say that he would address these concerns where they arise.
FTC Will Continue to Fight Anticompetitive Behavior in Labor Markets
FTC Chairman Ferguson has emphasized a continuing priority of protecting workers using antitrust laws.
He cited no-poach, wage-fixing, and noncompete agreements, as well as deceptive or misleading hiring practices, as examples of conduct the FTC will fight against to combat labor monopsonies and general harm to workers.
The FTC will approach these issues based on individual cases, not rulemaking (like the Biden administration’s noncompete ban).
Agencies Indicate Return of Merger Remedies
Statements from FTC Commissioner Holyoak and AAG nominee Slater indicate that both the FTC and DOJ will become more open to evaluating merger remedies under the new administration.
Holyoak has stated that the agencies should consider remedies like divestitures when such remedies can successfully preserve competition lost by a merger. Similarly, Slater has stated that when merger remedies are “done right,” they can remove competitive harm from a merger.
FTC Issues Policy to Avoid Staff Participation in the American Bar Association (ABA) Antitrust Section Activities
In response to the ABA’s criticism of the new Trump administration’s recent actions, on February 14, 2025, FTC Chairman Ferguson prohibited FTC political appointees from holding leadership positions in the ABA, participating in or attending ABA events, and renewing ABA memberships.
Ferguson pointed to several historical examples of what he asserts have been ABA political partisanship and leftist advocacy to support his decision, as well as views on the ABA’s loyalty to the interests of Big Tech.
Ferguson Intends to Pursue Diversity, Equity, and Inclusion (DEI), Environmental, Social, and Governance (ESG) Collaborations as Section One Violations
In a document laying out his policy priorities created prior to his appointment to chairman, FTC Chairman Ferguson explained he intends the FTC to “investigate and prosecute collusion on DEI, ESG, advertiser boycotts, etc.,” suggesting the agency may focus its investigations on companies participating in industry groups or other collaborative ventures intended to address social issues or manage industry risks associated with environmental, labor, or diversity issues.
Uncertainty Prevails Over Future FTC Enforcement of the Robinson-Patman Act
FTC Commissioner nominee Meador has written favorably of federal enforcement of the Robinson-Patman Act, a statute prohibiting discriminatory pricing which was largely ignored until the last years of the Biden administration.
Meador suggested that the law should be enforced, particularly in the grocery and consumer packaged goods industries. Ferguson and Holyoak have written in recent FTC dissents that the FTC’s resources would be better served by enforcing the law in appropriate cases where the alleged price discrimination harms competition (e.g., involving actors with market power using price discrimination to monopolize).
Until Meador is confirmed, it is uncertain whether and how Robinson-Patman will be enforced.
Nonprofit Health Care Mergers – Introduction: With Complexity Comes Opportunity
In the evolving health care landscape, mergers between nonprofit health care organizations are becoming increasingly common. Mergers are often driven by a combination of economic factors, the need to improve quality and efficiency of care, and the desire to create value for patients and communities. As the first post in our nonprofit merger series, we will explore why nonprofit health care entities may consider a merger, analyze the economic pressures influencing such decisions, and discuss the structures of nonprofit transactions, including the differences between member substitutions and true mergers. Forthcoming posts in this series will examine the unique due diligence concerns, regulatory approvals, and financing arrangements involved in nonprofit health care mergers.
The Economic Drivers of Nonprofit Health Care Mergers
1. Cost Efficiency and Scale Economies
It is not unusual to find multiple nonprofit health care organizations serving the same or similar patient community in a given market or region. Although competition within a for-profit industry may be seen as beneficial for consumers, most nonprofit health care organizations are competing for the same sources of government funding and/or charitable donations for their capital needs, which can weaken or inhibit the impact of their work both individually and in the aggregate.
As a result, overlapping nonprofits may realize significant economies of scale and make a substantially greater impact by joining forces and centralizing their efforts through a merger. By combining their operations, two organizations can reduce duplicative costs in areas such as administration, technology, and supply chain management. For example, by consolidating back-office functions such as human resources, billing, and procurement, a merged entity can lower its operational expenses and redirect those savings into improving patient care and expanding services. For smaller entities in particular, the cost of implementing advanced medical technology or transitioning to new electronic health record (EHR) systems can be prohibitive. By merging, organizations may be better equipped to absorb these costs and ensure their long-term financial sustainability.
2. Increased Bargaining Power with Payers and Third Parties
Another economic factor is the increased leverage that a larger health care organization has when negotiating with insurance companies and other payors. Together, a merged organization can exercise more market power and negotiate better reimbursement rates than any of the parties could on their own. Higher reimbursement can significantly improve the financial outlook for a nonprofit health care organization, which must carefully balance its mission with its financial health. Before proceeding with a merger, the parties will often engage a third-party consultant to analyze their current payor arrangements and identify opportunities for improvement.
3. Access to Capital
Nonprofit health care organizations, unlike their for-profit counterparts, do not have access to equity markets to raise capital. Mergers can offer a solution to this challenge. By merging, two organizations can improve their creditworthiness, making it easier to obtain loans and other forms of debt financing for future expansion, facility improvements, or technology upgrades. This is particularly important as health care organizations seek to invest in value-based care models that require significant upfront investment in care coordination, population health management, and IT infrastructure. Lending arrangements for nonprofits are typically quite challenging due to concerns about maintaining tax status, use of funds, and restrictions associated with both. It is not uncommon for organizations to restructure their lending arrangements and partners during a merger process or immediately thereafter.
Improving Delivery of Care
1. Enhancing Quality of Care
One of the key motivations for a nonprofit merger is to improve quality and continuity of care. Smaller health care organizations, particularly those in rural areas, may struggle to provide specialized services or maintain high clinical practice standards due to more limited resources. A merger allows the parties to pool their resources and share best practices to build a more efficient and effective care delivery system, thereby improving patient outcomes and practitioner recruitment efforts.
Additionally, mergers can help organizations streamline care pathways. For instance, a health care system with multiple facilities may create better-integrated care models, improving coordination between primary care, specialty care, and hospital services. This enhances patient outcomes by reducing duplication of services, minimizing delays in care, and ensuring that patients receive the appropriate care in the most efficient setting.
2. Expanding Access to Care
For many nonprofit health care organizations, expanding access to care — especially for underserved populations — is a central part of their mission. Mergers can help organizations achieve this goal by expanding their geographic reach and the range of services that they can provide. For example, a small community hospital may merge with a larger regional health system to provide its patients with access to specialized services that were previously unavailable locally, such as oncology or cardiology.
Furthermore, mergers may enable organizations to better address social determinants of health, which is increasingly recognized as critical to improving population health. For example, a Federally Qualified Health Center (FQHC) with a strong primary care practice may consider merging with a nonprofit community-based behavior health clinic to create an integrated preventative care network specific to the medical and behavioral health needs of its community. The larger, more financially stable merged organization may then be able to invest additional resources in community health initiatives, such as housing support and food security programs.
3. Investing in Innovation
Health care providers, and particularly nonprofits, may find it difficult to keep up with the rapid pace of innovation in the health care sector. Merged organizations are often better positioned to invest in these innovations, particularly in areas like telemedicine, data analytics, precision medicine, and value-based care models. By combining resources and patient base data, nonprofit health care organizations can become more responsive to the health care needs of their patient community, contributing to improved clinical outcomes and, in turn, a more financially stable future.
Value Creation Beyond Economics and Care Delivery
1. Mission Alignment
Nonprofit health care organizations are mission-driven, with the goal of serving their communities and improving health outcomes. When two nonprofit organizations merge, they typically seek to align their missions and values. This alignment is essential for ensuring the new entity remains focused on its core objective — whether that is serving a particular patient population, improving community health, or promoting medical research and education.
This often creates a situation where the two parties to the proposed merger are forced to negotiate a revised set of bylaws better suited for the combined entity post-closing. Important in this negotiation is understanding the terms around board structure, committees, executive officers, and general governance post-closing. It is not uncommon to see an expanded board or some combination of the two boards along with a realignment in officer positions. This is often an area of significant negotiation during the merger process.
2. Organizational Culture and Leadership Stability
In the nonprofit health care sector, where mission and values are paramount, ensuring that the two organizations’ cultures are compatible is essential. A well-executed merger offers a unique opportunity to bring fresh perspectives into leadership while preserving and building upon the parties’ existing strengths. By integrating their boards and leadership teams, merged organizations may foster the environment for more innovative and effective strategies for fulfilling a unified mission.
Structures of Nonprofit Health Care Transactions
Nonprofit health care mergers utilize unique transaction structures, primarily because they do not have shareholders and are organized for charitable purposes. Two common structures for combining nonprofit health care organizations include a member substitution and a true merger per state law.
1. Member Substitution
In a member substitution transaction, one nonprofit organization becomes the controlling member of another nonprofit without the two organizations dissolving or fully integrating into a single entity. The sole member (usually the parent organization) gains the authority to appoint the board members of the other organization and effectively controls its governance and operations. Note that a member substitution may not be viable in some states where nonprofit entities are not required or permitted to have members.
Benefits: Member substitution is often viewed as a less disruptive approach compared to a true merger. With a member substitution, the controlled entity retains its legal identity, which can help preserve relationships with donors, the community, and key stakeholders. This structure can also be advantageous for organizations wanting to maintain some degree of autonomy, particularly if they have a strong local presence or identity. Also important is that this structure still maintains separation of liabilities between each entity, i.e., liabilities of the nonprofit relinquishing control do not become the liabilities of the controlling member. A merger between a large health system and a smaller, local hospital may elect this structure in order to minimize disruption to the controlled entity’s local operations.
Challenges: The drawback of a member substitution is that it may not achieve the full benefits of integration, such as cost savings or streamlined operations. There may also be governance challenges if the controlled entity’s leadership or board resists the level of oversight imposed by the parent organization. Administratively, a member substitution can also be challenging because of the multiple levels of board governance.
2. True Merger
In a true merger, two or more nonprofit health care organizations combine into a single legal entity. The merged organization typically has a unified governance structure, leadership team, and operational model. This type of merger represents full integration and can provide the most significant opportunities for cost savings, operational efficiencies, and strategic growth.
Benefits: A true merger allows for complete consolidation of assets, liabilities, and operations. The merged organization can realize the maximum potential for economies of scale, enhanced bargaining power, and operational integration. Additionally, a true merger simplifies governance by creating a single board of directors and a unified executive leadership team.
Challenges: A true merger is more complex and may require regulatory approvals, including from the state attorney general or other regulatory bodies overseeing nonprofit or health care entities. The process can be time-consuming and may involve significant costs associated with legal, financial, and operational integration. A true merger also means that the surviving entity inherits the liabilities of the merged entity, which can result in unforeseen liability and risks for the surviving entity.
Conclusion
Mergers among nonprofit health care organizations are driven by a combination of economic pressures, the need to improve care delivery, and the desire to create long-term value for patients and communities. Whether through a member substitution or a true merger, these transactions can help organizations achieve financial stability, enhance quality of care, and expand access to services. However, nonprofit mergers require careful planning, particularly around governance, cultural integration, and mission alignment, to ensure that the merged organization remains focused on its charitable objectives and continues to serve its community effectively.
For nonprofit health care organizations considering a merger, it is essential to weigh both the financial and operational benefits, as well as the impact on the mission, before moving forward. With the right strategic approach, a merger can both strengthen the financial position of the parties and enhance their ability to serve their patients and communities.
The Personal Side of M&A: Helping Business Owners Turn Vision into Legacy
For many business owners, their company is far more than a financial asset or something they list on a personal financial statement. It’s the product of their years of hard work, risk, and dedication. In many cases, it is even a family legacy. As an M&A lawyer, I have had the privilege of counseling many business owners through one of the most significant chapters in their lives: the sale of their business.
The Emotional Aspect of Selling a Business
Selling a business isn’t simply a transaction; it’s a transition from one phase of life to the next. For entrepreneurs, a company is more than just an income stream. It embodies their vision, the long days and late nights they worked to build it, and the sacrifices they made to keep it growing.
For me, as an M&A lawyer representing the seller’s side, guiding owners through this emotional journey is a more worthwhile experience than the sale itself. While the numbers and legal terms are critical, equally important are the personal goals and aspirations of my clients. For some, selling a business marks the beginning of retirement or a well-earned sabbatical. For others, it’s an opportunity to invest in a new venture and reignite their entrepreneurial spark. Understanding why they are selling and what’s next for them is as essential as negotiating the deal itself.
Aligning Personal Goals with Strategy
Each seller’s situation is unique. Some business owners want to maximize value to secure their family’s future, while others prioritize finding the right buyer to preserve the culture and legacy they’ve built. I view my role as more than just structuring a deal—it’s about helping clients achieve their personal definition of success.
For instance, when an entrepreneur tells me they want to ensure their employees are taken care of following the sale, I weave that commitment into the negotiation process along with the other material deal terms. When an owner envisions using the proceeds to pursue philanthropic endeavors, I help ensure that the practical financial outcome supports that goal.
Celebrating the Entrepreneurial Spirit
Entrepreneurs are remarkable individuals. They start with an idea, take risks others might avoid, and build a legacy that positively impacts their lives and the lives of their employees. I’ve always admired the entrepreneurial spirit and it’s incredibly rewarding to be part of their journey at such a transformative moment.
One of the most fulfilling aspects of my work is seeing business owners realize what they’ve built. In many ways, a successful sale is a celebration of their achievements. It’s an acknowledgment that their vision and effort created something enduring—a business that now has new opportunities for growth under new leadership.
Why the Right Counsel Matters
The sale process can be complex and overwhelming, especially when emotions run high. Having the right M&A counsel means having someone who not only understands the legal and financial nuances, but also appreciates the personal stakes. My approach is to bring clarity, confidence, and care to every step of the process. Sellers need someone who can advocate for their best interests while respecting the legacy they’re entrusting to the next owner.
Final Thoughts
The sale of a business is more than a transaction; it’s the culmination of a dream. Representing sellers has given me a front-row seat to some truly inspiring entrepreneurial stories, and I feel privileged to help business owners achieve their goals—both professional and personal. Whether it’s unlocking new opportunities, securing a family’s future, or ensuring the continued success of a legacy, my mission is to make the process as smooth, successful, and meaningful as possible.