Hot Documents in Antitrust Merger Reviews

Every deal document tells a story, and in an antitrust merger review, overbroad and imprecise language can cost months of investigation and millions of dollars in legal fees. In this Committed Capital episode, Dechert antitrust attorneys Rani Habash, Brian Hanna and Greg Luib draw on their combined experience at the firm, the FTC and the DOJ to break down the "hot documents" that attract unwanted regulatory attention and explain how companies can better prepare for their next merger filing.

Transcript

Intro: 0:09

Welcome to Dechert's Committed Capital. This is an episode of Sidecar, a special bite-sized discussion of the latest market issues.

Rani Habash: 0:24

Welcome everyone to Dechert's podcast on corporate and private equity legal trends. I'm Rani Habash, a partner in Dechert's antitrust group in D.C. I advise companies on the antitrust aspects of mergers and acquisitions among their competitors, and help them navigate antitrust merger reviews by the Federal Trade Commission, Department of Justice and State Attorneys General. Today, we'll be talking about hot documents in antitrust merger reviews, the important role these documents play in obtaining antitrust clearance and how companies can prepare for these reviews to improve the odds of their deals getting through. With me today are Greg Luib and Brian Hanna, and I'll let you introduce yourselves, please.

Greg Luib: 1:04

Hi, this is Greg Luib. I'm a partner at Dechert, also in the antitrust group in Washington. After spending over a decade at the Federal Trade Commission, I now focus on merger review and government investigations.

Brian Hanna: 1:17

And hi, I'm Brian Hanna, antitrust counsel at Dechert, based in Washington, D.C. I also advise companies through complex merger reviews, high state government investigations, as well as private antitrust litigation. And what I bring to the table today is I spent nearly a decade at the Department of Justice, where I served in a range of leadership roles on high-profile merger investigations. So I'll bring that government perspective to our discussion today.

Rani Habash: 1:45

Thank you, Greg and Brian. So, the purpose of today's podcast is to introduce our audience to these antitrust hot documents. So, what we've done is we've gone back and analyzed merger cases for decades, put together a collection that we call the Dechert Antitrust Hot Documents Collection, which is available on our website at www.dechert.com/HotDocuments. These documents, for every transaction that is reportable under the HSR Act, the Hart-Scott-Rodino Act, companies are required to attach certain deal documents to that filing now. These documents are crucial because they help the antitrust lawyers at the government decide whether they need to conduct a thorough months-long investigation, and ultimately whether to block a transaction or require a settlement to get the deal through. The Dechert Antitrust Hot Documents Collection contains more than 100 real-world examples of documents that created unwanted attention from government authorities during merger reviews, and these were used in public filings to help shape the narrative against a transaction, typically in front of a judge or in front of the public. The purpose of the collection is intended to help companies develop pro-competitive fact-based deal themes and spot content that may be misleading or require further context, and look... that's not to say that all these documents are actually bad. Often, what happens is that when the government attorneys are reviewing these, they can misconstrue the language or they can take it out of context in a way that could have been avoided and could have prevented a lot of money and time being spent, and so the Dechert collection is really a fun, practical tool. It helps the lawyers, the deal makers and some of the business teams learn from these past colorful examples. Every deal I've ever worked on has some kind of positive benefit for consumers and it's important to promote that messaging early in the process and across the entire deal team for consistency and careful planning is important because, as we'll talk about later, it can be the difference between getting your deal cleared quickly with smaller legal expenses or getting your deal cleared after 12 or more months with millions of dollars in legal expenses, so with that I want to turn over to Brian. And I just had a question about what to do if you're on the selling side, specifically in deals the seller's typically putting together a Confidential Information Memorandum, and that often contains some of the most colorful language that we see in these deals. What types of statements tend to raise antitrust red flags? And how should sellers be thinking about framing these concepts?

Brian Hanna: 4:31

So, these Confidential Information Memorandum, we call them CIMs. Why are CIMs a primary source of hot documents, it's because CIMs are a marketing device prepared by bankers who are not thinking about the antitrust enforcers when drafting. The banker's natural instinct is to tell the most compelling story possible to attract higher bids, and that's exactly what they're. Supposed to do the challenge is language that's effective for marketing the business can sometimes create antitrust risk if it isn't described carefully. So let me go through examples that we see again and again. First, referring to something as a market that might sound casual and harmless in one of these CIMs, but to DOJ and the FTC, you may be defining the relevant market, which is one of the most critical issues in their merger review. They have to define a market to evaluate market shares and then assess whether the deal is harmful to competition, so once you have defined a market for them, it can be difficult to walk that back. So, how do you mitigate that? Instead of using the term market, use more neutral terms like industry or segment, and then second, how you describe competition can also create just as many issues. We often see phrases like competitive moat or high barriers to entry. When I was at the DOJ, and I saw language like that, it immediately set off alarm bells. Competitive moat to me was more alarming as an enforcer. We see both sellers and buyers use this phrase. It signals that the combined company may be able to raise prices without the meaningful risk of new or existing competition stepping in, and documents like that can absolutely contribute to a decision to open a lengthy or costly second request investigation, so a better approach is to focus on what's actually driving the success of the business, things like product quality, customer service, innovation, and it's also important to avoid broad or speculative statements about barriers to entry in our experience, that's typically just boilerplate. It's a term that just gets reused by the bankers over and over again in these CIMs, but most of the time it doesn't reflect how the industry actually operates in practice. So, as a brief recap, instead of market, use more neutral language like industry or segment, and instead of shorthand, like competitive moat or high barriers to entry, describe why the company is successful and why customers want to do business with you.

Rani Habash: 7:39

Thanks, Brian. I know every CIM I've ever looked at seems like the high barriers to entry is just part of the template and keeps getting reused, whether it's completely accurate or not. So it's a very important point to really think about that. Shifting over to the buyer's side, Greg, could you talk a little bit about deal rationale and synergy documents and how those are often central to the DOJ and FTC reviews. How should buyers think about crafting and documenting the rationale for a transaction?

Greg Luib: 8:10

First, deal rationale documents are key to any antitrust review. These are often prepared by senior level executives and shared with the company's board, so they have instant credibility, and they often speak directly to the ultimate antitrust question of what effect the deal will have on competition. So they are important to regulators. So, what are best practices for merging parties here with deal rationale documents? We advise clients regularly that having a pro-competitive message about a deal from the beginning and supported by commercial realities and the financial case for the deal is key. At the very least, you want to ensure that deal documents are benign from an antitrust perspective. Another important factor is message consistency that includes internal communications involving the deal team, corporate development, senior management, and the board, but also external communications by the companies, communications, investor relations, and government affairs teams, having that message consistency across each and every one of those groups is important in getting a deal through. So, turning to maybe some more practical advice, there are certain high-risk phrases similar to what Brian just described that regularly attract the attention of regulators in deal rationale documents. Anything that hints at or in some cases explicitly states that the merger will reduce competition is clearly going to grab the attention of the regulators, and some of the phrasing that we tend to see in documents is, for example, the merger will neutralize competition or. Or will remove a significant or growing competitor from the market. Another message that you want to avoid in deal ratio documents is that the merger will somehow increase the bargaining leverage of the combined firm, and here we often see that couched in terms of greater or strengthened negotiating or buying power on the part of the combined firm post merger, and then finally anything in deal rationale documents suggesting that the deal will result in higher prices will grab the regulator's attention, and it may not be as explicit as hey prices are going up following the transaction, but it can be couched in terms of the merger providing greater pricing discipline in the market, or that the merger will end price wars happening between the merging parties and others in the marketplace, these are just a few examples of the type of language merging parties should avoid in their deal documents.

Rani Habash: 11:10

So, just looking at recent merger enforcement trends, Greg and Brian, what developments stand out when it comes to hot documents?

Greg Luib: 11:19

For me, one of the most interesting developments is that the FTC and DOJ are increasingly collecting less formal communications, including things like text messages and Teams chats, and those informal messages often contain the most candid and, frankly, most damaging language. The practical implication is that document discipline now extends far beyond emails and slide decks,

Brian Hanna: 11:45

and for me, I'd be remiss if I didn't note that a theme that we see come up again and again in merger enforcement is how much and at trial, Dechert attorneys highlighted over and over again the absence of hot documents through a witness testimony, and the judge said, lacking a smoking gun, the smoking gun here being the hot documents, the FTC fires away with a few squirt guns. Believe me, you want DOJ and FTC firing away with only squirt guns, not smoking guns. So, Rani, any closing thoughts on hot

Rani Habash: 12:56

Yeah, I think those were all very good points. I mean, a lot of times these documents, especially the text messages and team chats, sometimes they can have sarcasm, they can have exaggeration, maybe someone's not thinking about what they're writing, and then that often gets taken out of context and misconstrued. And so it's important for folks just to be aware of how these documents get used, and the reason it's so important is because Dechert's antitrust team, we carefully track how long these merger investigations take in our DAMITT tool, which is the Dechert Antitrust Merger Investigation Timing Tracker, and what we found is that deals that require an in-depth investigation took about 12 months in 2025 from announcement to an agency decision, and then if there was litigation to block the deal, that took another six or more months. So you're now talking about 18 or more months. You're talking about millions of dollars in legal expenses that perhaps could have been avoided had folks just not been so loose documents? with some of the language in their communications about the deal, and so you know, by contrast, if you have a deal where there aren't issues, you can get that cleared in the initial 30-day waiting period. You save millions of dollars, and then you also avoid all the executive time and sort of headache and resources that go into complying with a government second request investigation and potential litigation. This is only becoming more important because the government is changing the HSR rules to even expand the types and scope of the documents to get picked up in the HSR filings, and so, you know, as more and more documents come in, it just leads to more and more potential issues for the companies, so it's becoming more important than ever. So we've put together the collection, as I said, on www.dechert.com/HotDocuments. You can download the collection there, and we hope that you'll reach out as well if you'd like to meet for a personalized training for your company. With that, thank you all for listening today. Hope to talk to you soon.

Outro: 15:07

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