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December 4, 2019 |
Webcast: Preparing for Enhanced Antitrust Enforcement in Government Procurement

DOJ’s newly-announced Procurement Collusion Strike Force portends increased federal antitrust and False Claims Act enforcement in government procurement. Join Gibson Dunn partners as they discuss DOJ’s enforcement techniques, strategies for mitigating legal risks in the procurement process, and response plans for in-house counsel when alerted to a potential government investigation. Topics to be covered include: How antitrust and False Claims Act enforcement are being deployed in government procurement cases Risk factors and red flags in competitive bids that may attract DOJ prosecutors Best practices to minimize antitrust risks in government procurement processes To read more about the Procurement Collusion Strike Force, visit our Client Alert regarding its announcement, “DOJ Announces a New Strike Force to Combat Antitrust Misconduct in Government Procurement.” View Slides (PDF) PANELISTS: Kristen Limarzi is a partner in the Washington, D.C. office. Before joining Gibson Dunn, Ms. Limarzi was the Chief of the Appellate Section of DOJ’s Antitrust Division, and she was involved in every civil non-merger matter and all of the most complex criminal cases the Division litigated in the last decade. Her practice focuses on investigations, litigation, and counseling on antitrust merger and conduct matters, as well as appellate and civil litigation. Scott Hammond is a partner in the Washington, D.C. office and Co-Chair of the Antitrust and Competition Practice Group. Previously, Mr. Hammond served as a DOJ prosecutor for 25 years, including 8 years as the Antitrust Division’s Deputy Assistant Attorney General for Criminal Enforcement – the highest ranking career lawyer in the Antitrust Division. He assists clients in antitrust and white-collar crime compliance, crisis management and government investigations across all industry sectors. Jeremy Robison is a partner in the Washington, D.C. office. His practice focuses on defending companies and individuals involved in antitrust investigations by U.S. and international enforcement authorities, conducting internal investigations, and advising companies on antitrust compliance programs and policies. Mr. Robison has represented clients from a range of industries in antitrust investigations, including in the financial services, pharmaceutical, defense, healthcare, and technology sectors. Jonathan Phillips is a partner in the Washington, D.C. office where he focuses on white collar enforcement matters and related litigation. Before joining the firm, Mr. Phillips served as a Trial Attorney in DOJ’s Civil Division, Fraud Section, where he investigated and prosecuted allegations of fraud against the United States under the False Claims Act and related statutes, including cases involving bid rigging and other allegations of fraud by government contractors. Joseph West is a partner in the Washington, D.C. office and former Co-Chair of the firm’s Government Contracts Practice. For 40 years, Mr. West has concentrated his practice on contract counseling, compliance/enforcement, and dispute resolution. He has represented both contractors (and their subcontractors, vendors and suppliers) and government agencies, and has been involved in cases before numerous federal courts and agencies. Lindsay Paulin is a litigation associate in the Washington, D.C. office. Her practice focuses on a wide range of government contracts issues, including internal investigations, claims preparation and litigation, bid protests, and government investigations under the False Claims Act. Ms. Paulin’s clients include contractors and their subcontractors, vendors, and suppliers across a range of industries including aerospace and defense, information technology, professional services, private equity, and insurance. MCLE CREDIT INFORMATION: This program has been approved for credit in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 1.0 credit hour, of which 1.0 credit hour may be applied toward the areas of professional practice requirement. This course is approved for transitional/non-transitional credit. Attorneys seeking New York credit must obtain an Affirmation Form prior to watching the archived version of this webcast. Please contact Jeanine McKeown (National Training Administrator), at 213-229-7140 or jmckeown@gibsondunn.com to request the MCLE form. Gibson, Dunn & Crutcher LLP certifies that this activity has been approved for MCLE credit by the State Bar of California in the amount of 1.0 hour. California attorneys may claim “self-study” credit for viewing the archived version of this webcast.  No certificate of attendance is required for California “self-study” credit.

November 11, 2019 |
DOJ Announces a New Strike Force to Combat Antitrust Misconduct in Government Procurement

Click for PDF On November 5, 2019, the U.S. Department of Justice announced the creation of the Procurement Collusion Strike Force to combat antitrust violations and other crimes affecting government purchasing and programs at the federal, state, and local levels. Assistant Attorney General Makan Delrahim, head of the Antitrust Division, explained that the new Strike Force will have dedicated prosecutors from the Antitrust Division and U.S. Attorneys’ Offices, personnel from Inspector General offices (including the Department of Defense and the General Services Administration), and FBI special agents assigned to 13 districts located in the District of Columbia and eleven states. AAG Delrahim said these Strike Force teams will be tasked with investigating and prosecuting suspected procurement misconduct using a variety of federal laws, including antitrust, False Claims Act, and other statutes governing fraudulent behavior in the procurement process. As part of this effort, the Strike Force is training U.S. Attorneys’ Offices, Inspector General offices, and state and local government procurement officials about indicia of potential collusion during the procurement process. The Strike Force also intends to train government contractors and trade associations to raise awareness of the potential penalties for criminal and civil antitrust violations—including significant fines for corporations and imprisonment for individuals. The Strike Force is also soliciting whistleblower complaints about potential procurement violations through a new web-based reporting system and plans to invest in improved data analytics to detect potential irregularities in government procurement data. The Strike Force builds on DOJ’s successful deployment of strike forces in the past targeting specific enforcement priorities. The Health Care Fraud Strike Force, for example, has been in operation for more than a decade and resulted in charges against more than 4,200 defendants involved in nearly $19 billion in Medicare program billings. More recent initiatives have focused on elder fraud and organized crime. These strike forces have generally proven successful in concentrating federal enforcement resources on a high priority issue, thereby creating pressure for prosecutors to deliver cases. As a result, we expect to see substantially increased enforcement activity around government procurement over the next 12 to 18 months. We expect the new Strike Force to be an enforcement priority given the Antitrust Division’s increasing activity in government procurement over the past year.  At present, more than one-third of the Antitrust Division’s 100-plus open grand jury investigations involve public procurement or conduct that included the government among its potential victims.  And when these cases result in criminal resolutions, DOJ has been aggressive in leveraging the False Claims Act and other federal laws to secure additional damages for alleged harm to government agencies.  In two recent cases involving military fuel contracts and generic pharmaceuticals, DOJ obtained civil damages for harm to government agencies that dwarfed the criminal fines imposed for the underlying antitrust violation.  We expect this approach to be replicated by the Strike Force teams and, when a criminal conviction is obtained, offenders may face debarment as well as substantial fines and damages. Companies involved in government procurement should use this opportunity to revisit their antitrust policies and training programs to mitigate any legal risks that result from DOJ’s increased enforcement efforts. Gibson Dunn will be hosting a webcast on Wednesday, December 4th at 12:00pm EST to discuss the Procurement Collusion Strike Force in more detail, including (i) the risk factors and red flags in competitive bids that may attract attention from the new Strike Force teams and (ii) proactive steps that in-house counsel should be taking now to prepare for DOJ’s increased enforcement efforts. To register, please click here: https://gibsondunnevents.webex.com/mw3300/mywebex/default.do?siteurl=gibsondunnevents Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Antitrust and Competition, False Claims Act or Government Contracts practice groups, or any of the following authors: Kristen C. Limarzi – Washington, D.C. (+1 202-887-3518, klimarzi@gibsondunn.com) Scott D. Hammond – Washington, D.C. (+1 202-887-3684, shammond@gibsondunn.com) Rachel S. Brass – San Francisco (+1 415-393-8293, rbrass@gibsondunn.com) Jeremy Robison – Washington, D.C. (+1 202-955-8518, wrobison@gibsondunn.com) Chris Wilson – Washington, D.C. (+1 202-955-8520, cwilson@gibsondunn.com) Jonathan M. Phillips – Washington, D.C. (+1 202-887-3546, jphillips@gibsondunn.com) Joseph D. West – Washington, D.C. (+1 202-955-8658, jwest@gibsondunn.com) Lindsay M. Paulin – Washington, D.C. (+1 202-887-3701, lpaulin@gibsondunn.com) Please also feel free to contact any of the following practice group members: Antitrust and Competition Group: Washington, D.C. D. Jarrett Arp (+1 202-955-8678, jarp@gibsondunn.com) Adam Di Vincenzo (+1 202-887-3704, adivincenzo@gibsondunn.com) Scott D. Hammond (+1 202-887-3684, shammond@gibsondunn.com) Kristen C. Limarzi (+1 202-887-3518, klimarzi@gibsondunn.com) Joshua Lipton (+1 202-955-8226, jlipton@gibsondunn.com) Richard G. Parker (+1 202-955-8503, rparker@gibsondunn.com) Cynthia Richman (+1 202-955-8234, crichman@gibsondunn.com) Jeremy Robison (+1 202-955-8518, wrobison@gibsondunn.com) Chris Wilson (+1 202-955-8520, cwilson@gibsondunn.com) New York Eric J. Stock (+1 212-351-2301, estock@gibsondunn.com) Los Angeles Daniel G. Swanson (+1 213-229-7430, dswanson@gibsondunn.com) Samuel G. Liversidge (+1 213-229-7420, sliversidge@gibsondunn.com) Jay P. Srinivasan (+1 213-229-7296, jsrinivasan@gibsondunn.com) Rod J. Stone (+1 213-229-7256, rstone@gibsondunn.com) San Francisco Rachel S. Brass (+1 415-393-8293, rbrass@gibsondunn.com) Dallas Veronica S. Lewis (+1 214-698-3320, vlewis@gibsondunn.com) Mike Raiff (+1 214-698-3350, mraiff@gibsondunn.com) Brian Robison (+1 214-698-3370, brobison@gibsondunn.com) Robert C. Walters (+1 214-698-3114, rwalters@gibsondunn.com) Brussels Peter Alexiadis (+32 2 554 7200, palexiadis@gibsondunn.com) Jens-Olrik Murach (+32 2 554 7240, jmurach@gibsondunn.com) Christian Riis-Madsen (+32 2 554 72 05, criis@gibsondunn.com) Lena Sandberg (+32 2 554 72 60, lsandberg@gibsondunn.com) David Wood (+32 2 554 7210, dwood@gibsondunn.com) Munich Michael Walther (+49 89 189 33 180, mwalther@gibsondunn.com) Kai Gesing (+49 89 189 33 180, kgesing@gibsondunn.com) London Patrick Doris (+44 20 7071 4276, pdoris@gibsondunn.com) Charles Falconer (+44 20 7071 4270, cfalconer@gibsondunn.com) Ali Nikpay (+44 20 7071 4273, anikpay@gibsondunn.com) Philip Rocher (+44 20 7071 4202, procher@gibsondunn.com) Deirdre Taylor (+44 20 7071 4274, dtaylor2@gibsondunn.com) Hong Kong Kelly Austin (+852 2214 3788, kaustin@gibsondunn.com) Sébastien Evrard (+852 2214 3798, sevrard@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

November 4, 2019 |
U.S. News – Best Lawyers® Names Gibson Dunn Law Firm of the Year in Antitrust and Appellate

U.S. News – Best Lawyers® awarded Gibson Dunn its 2020 Law Firm of the Year for Antitrust Law and Appellate Practice. Additionally, the Firm earned Tier 1 rankings in 137 practice area categories in its 2020 Best Law Firms survey. Overall, the firm earned 172 rankings in nine metropolitan areas and nationally. The rankings were announced on November 1, 2019.

October 4, 2019 |
Gibson Dunn Ranked in the 2020 UK Legal 500

The UK Legal 500 2020 ranked Gibson Dunn in 15 practice areas and named seven partners as Leading Lawyers.  The firm was recognized in the following categories: Corporate and Commercial: Corporate Tax Corporate and Commercial: Equity Capital Markets – Mid-Large Cap Corporate and Commercial: EU and Competition Corporate and Commercial: M&A: upper mid-market and premium deals, £500m+ Corporate and Commercial: Private equity: transactions – high-value deals (£250m+) Dispute Resolution: Commercial Litigation Dispute Resolution: International Arbitration Dispute Resolution: Public International Law Human Resources: Employment – Employers Projects, Energy and Natural Resources: Oil and Gas Public Sector: Administrative and Public Law Real Estate: Commercial Property – Hotels and Leisure Real Estate: Commercial Property – Investment Real Estate: Property Finance Risk Advisory: Regulatory Investigations and Corporate Crime The partners named as Leading Lawyers are Sandy Bhogal – Corporate and Commercial: Corporate Tax; Steve Thierbach – Corporate and Commercial: Equity Capital Markets; Ali Nikpay – Corporate and Commercial: EU and Competition; Philip Rocher – Dispute Resolution: Commercial Litigation; Cyrus Benson – Dispute Resolution: International Arbitration; Jeffrey Sullivan – Dispute Resolution: International Arbitration; and Alan Samson – Real Estate: Commercial Property – Investment and Real Estate: Property Finance. Claibourne Harrison has also been named as a Rising Star for Real Estate: Commercial Property – Investment. The guide was published on September 26, 2019. Gibson Dunn’s London office offers full-service English and U.S. law capability, including corporate, finance, dispute resolution, competition/antitrust, real estate, labor and employment, and tax.  Our lawyers advise international corporations, financial institutions, private equity funds and governments on complex and challenging transactions and disputes. Our London corporate practice is at the forefront of cross-border M&A, financing and joint venture transactions, including advising clients seeking to access U.S. and European capital markets.  Team members handle major domestic and multi-jurisdictional commercial cases before English, EU and Commonwealth courts, and have a wealth of experience in taking complex matters to trial.  Gibson Dunn’s London office was founded more than 30 years ago.  Our dynamic team includes many dual-qualified lawyers with extensive language skills.

September 24, 2019 |
UK Supreme Court Decides Suspending UK Parliament Was Unlawful

Click for PDF The UK’s highest court has today ruled (here) that Prime Minister Boris Johnson’s decision to suspend (or “prorogue”) Parliament for five weeks, from September 9, 2019 until October 14, 2019, was unlawful. The Supreme Court, sitting with eleven justices instead of the usual five, unanimously found “that the decision to advise Her Majesty to prorogue Parliament was unlawful because it had the effect of frustrating or preventing the ability of Parliament to carry out its constitutional functions without reasonable justification”. It is a well-established constitutional convention that the Queen is obliged to follow the Prime Minister’s advice. The landmark Supreme Court ruling dealt with two appeals, one from businesswoman Gina Miller and the other from the UK Government. Mrs Miller was appealing a decision of the English Divisional Court that the prorogation was “purely political” and not a matter for the courts. The UK Government was appealing a ruling of Scotland’s Court of Session that the suspension was “unlawful” and had been used to “stymie” Parliament. A link to the full judgment is here. A key question before the Court, therefore, was whether the lawfulness of the Prime Minister’s advice to Her Majesty was “justiciable”, i.e. whether the court had a right to review that decision or whether it was purely a political matter. The Court held that the advice was justiciable: “The courts have exercised a supervisory jurisdiction over the lawfulness of acts of the Government for centuries”. The next question was on the constitutional limits of the power to prorogue. The Court decided that prorogation would be unlawful if it had the effect of “frustrating or preventing, without reasonable justification, the ability of Parliament to carry out its constitutional functions as a legislature and as the body responsible for the supervision of the executive”. The Court stated that it was not concerned with the Prime Minister’s motive; the key concern was whether there was good reason for the Prime Minister to prorogue as he did. The subsequent question related to the effect of the prorogation. The Supreme Court held that the decision to prorogue Parliament prevented Parliament from carrying out its constitutional role of holding the government to account and that, in the “quite exceptional” surrounding circumstances, it is “especially important that he [the Prime Minister] be ready to face the House of Commons.” The Court held that it was “impossible for us to conclude, on the evidence which has been put before us, that there was any reason – let alone a good reason – to advise Her Majesty to prorogue Parliament for five weeks”. The final question was on the legal effect of that finding and what remedies the Court should grant. The Court declared that as the advice was unlawful, the prorogation was unlawful, null and of no effect; Parliament had not been prorogued. The Supreme Court’s judgment further explained that “as Parliament is not prorogued, it is for Parliament to decide what to do next.” Almost immediately after judgment was handed down, it was announced that both the House of Commons and House of Lords will resume sitting tomorrow, Wednesday September 25, 2019. Prime Minister’s Questions – usually scheduled for each Wednesday that Parliament is in session – will not take place due to notice requirements. The UK Government has pledged to “respect” the judgment and the Prime Minister plans to return to the UK from New York, where he is due to address the U.N. General Assembly. Shortly before Parliament was prorogued, a new law was passed requiring the Prime Minister to seek an extension to the current October 31 deadline for the UK to leave the EU unless Parliament agreed otherwise (European Union (Withdrawal) (No. 2) Act 2019). The Government has asserted that this legislation is defective and continues to insist that the UK will leave the EU on October 31, 2019. The Supreme Court’s judgment does not directly affect the position in respect of the October 31 deadline. This client alert was prepared by Patrick Doris, Anne MacPherson, Charlie Geffen, Ali Nikpay and Ryan Whelan in London. We have a working group in London (led by Patrick Doris, Charlie Geffen, Ali Nikpay and Selina Sagayam) addressing Brexit related issues.  Please feel free to contact any member of the working group or any of the other lawyers mentioned below. Ali Nikpay – Antitrust ANikpay@gibsondunn.com Tel: 020 7071 4273 Charlie Geffen – Corporate CGeffen@gibsondunn.com Tel: 020 7071 4225 Sandy Bhogal – Tax SBhogal@gibsondunn.com Tel: 020 7071 4266 Philip Rocher – Litigation PRocher@gibsondunn.com Tel: 020 7071 4202 Jeffrey M. Trinklein – Tax JTrinklein@gibsondunn.com Tel: 020 7071 4224 Patrick Doris – Litigation; Data Protection PDoris@gibsondunn.com Tel:  020 7071 4276 Alan Samson – Real Estate ASamson@gibsondunn.com Tel:  020 7071 4222 Penny Madden QC – Arbitration PMadden@gibsondunn.com Tel:  020 7071 4226 Selina Sagayam – Corporate SSagayam@gibsondunn.com Tel:  020 7071 4263 Thomas M. Budd – Finance TBudd@gibsondunn.com Tel:  020 7071 4234 James A. Cox – Employment; Data Protection JCox@gibsondunn.com Tel: 020 7071 4250 Gregory A. Campbell – Restructuring GCampbell@gibsondunn.com Tel:  020 7071 4236 © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

September 16, 2019 |
DOJ’s Antitrust Division Elects Binding Arbitration to Resolve Merger Challenge

Click for PDF On September 4, 2019, the U.S. Department of Justice’s Antitrust Division filed a complaint in the Northern District of Ohio challenging Novelis Inc.’s proposed $2.6 billion acquisition of Aleris Corporation. In a first, the Antitrust Division has agreed to resolve the matter through binding arbitration under the Administrative Dispute Resolution Act of 1996, 5 U.S.C. § 571 et seq. Assistant Attorney General Makan Delrahim remarked that “[t]his new process could prove to be a model for future enforcement actions, where appropriate, to bring greater certainty for merging parties and to preserve taxpayer resources while staying true to the [Antitrust Division’s] enforcement mission.” It remains to be seen whether this case portends a larger shift in the Antitrust Division’s approach to resolving merger investigations and negotiating remedies, or whether arbitration will be limited to the specific circumstances surrounding Novelis’ acquisition of Aleris. To the extent arbitration becomes a meaningful option for merging parties in future cases, however, the ramifications are significant. Background The Antitrust Division and the Federal Trade Commission share responsibility for investigating proposed mergers and acquisitions to determine whether, if consummated, they would violate Section 7 of the Clayton Act, which prohibits transactions whose effect “may be substantially to lessen competition.”[1] Parties to transactions that are subject to the Hart-Scott-Rodino Act (or “HSR”) must observe a waiting period before closing, and typically do not close until the Antitrust Division completes its investigation. If, after investigating a proposed transaction, the Antitrust Division concludes it would violate Section 7, it will typically demand a remedy (such as a divestiture of one party’s assets) or, if the parties do not propose a sufficient remedy, challenge the transaction in federal district court. Novelis announced its proposed acquisition of Aleris on July 26, 2018, and the proposed transaction was subject to HSR. Under the terms of the agreement, Novelis would acquire Aleris’ 13 production facilities across North America, Europe, and Asia.[2] Following an antitrust investigation lasting roughly 14 months, the Antitrust Division filed suit challenging the proposed acquisition.[3] The complaint alleged that the transaction would combine two of only four North American producers of aluminum auto body sheet metal, and that the combined company would represent 60 percent of production capacity in this market. The Antitrust Division supported its claims by quoting internal documents where Novelis indicated concern that, absent the transaction, Aleris would be acquired by a new entrant that would “likely … bid aggressively and negatively impact pricing” in the market. In an unusual move, the Antitrust Division simultaneously issued a press release stating that the parties had agreed to arbitrate the central question of product market definition, the outcome of which would determine whether the parties would divest certain assets to cure the alleged competition concern.[4] In a related court filing, the Division laid out its rationale for pursuing arbitration rather than its usual practice of challenging the merger in federal court or agreeing to a negotiated divestiture. It noted that merger challenges require “weeks-long trials involving the submission of thousands of pages of exhibits, and testimony from a substantial number of fact witnesses, as well as extensive expert testimony.”[5] Citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 344–46 (2011), the Antitrust Division explained that arbitration is favored by federal policy and would offer “a speedier and less costly alternative to litigation.” The filing attached a redacted term sheet explaining that the arbitrator would decide one question: whether aluminum auto body sheet constitutes a relevant product market under the Horizontal Merger Guidelines. The arbitrator would not reach the ultimate question of whether the transaction would substantially lessen competition under section 7 of the Clayton Act. Significantly, according to the Division, whether or not the parties will need to divest assets hinges on the arbitrator’s determination. If the arbitrator ruled that the relevant product market is broader than aluminum auto body sheet, the Division agreed to withdraw its complaint and the parties could close without any divestiture remedy. If the arbitrator concluded that aluminum auto body sheet is the relevant market, then the parties would be obligated to divest the overlapping business to a buyer acceptable to the Division through a Tunney Act proceeding in which a court would approve the settlement so long as it is in the “public interest.” This unique process provides the parties with certainty as to when they can close their merger. If the arbitration proceedings are still pending on December 20, 2019, or if the Antitrust Division prevails, then the parties and the Antitrust Division agreed to negotiate a hold separate order. The hold separate order would allow the parties to close their deal pending final court approval of their agreed-upon remedy, so long as they agree to hold the divested assets separate. If the parties prevail, however, then they can close their deal without conditions (i.e., they can close without a hold separate or a remedy). Either way, closing would be allowed no later than December 20. Key Takeaways An Emerging Third Option? Up until now, parties to a transaction that the Antitrust Division claimed raised antitrust concerns had two options to resolve the dispute: (1) negotiate a remedy to address competitive concerns raised by the transaction, or (2) litigate against the Antitrust Division in federal court. Novelis may signal the Antitrust Division’s willingness to offer a third option that allows the Division and the parties to avoid a trial in federal court by allowing an arbitrator to decide dispositive issues. However, a broader policy has not yet been announced, and it may turn out that this new arbitration option may be limited to certain cases. AAG Delrahim noted “[t]he division would have to evaluate several factors before agreeing to arbitrate,” including the potential “efficiency gains,” whether the issues to be resolved in arbitration are “clear and easily can be agreed upon,” and the cost of any “lost opportunity to create valuable legal precedent.” Novelis offers clues as to how these factors might apply in future cases. The Division and the merging parties agreed on the parameters of a divestiture remedy and that the need for the remedy turns on the resolution of a discrete question—in this case, the definition of the relevant product market. Matters that present multiple or more complex antitrust issues or where no structural remedy is practically available may not be candidates for arbitration. Of course, mergers being investigated by the Federal Trade Commission would not be subject to this new policy. Timing Certainty May Be the Primary Benefit.  The Division’s filing suggests that arbitration would be “speedier” than litigation, though the Novelis arbitration timelines are comparable to the deadlines in case management orders for recent merger trials. Per the filing, the Division and the parties are obligated to work toward commencing the arbitral hearing within 120 days from the filing of an answer, with the hearing to be completed within 21 days, and a final decision within 14 days after the hearing. Assuming no extension to the 21-day deadline to file an answer under Rule 12, the parties would receive an arbitration decision within 176 days, or almost six months. This is roughly equivalent to the length of time typically needed to reach a decision on the merits in a federal merger trial, which averaged roughly 150 days for litigated in recent years. This suggests that the primary benefit of arbitration in this setting may be timing certainty, though limits on appeals of arbitration decisions may present time savings over trial and appellate litigation. Limited appeal rights may further narrow the scenarios in which arbitration will be a suitable option for either the Division or the parties. Fewer Confidentiality Concerns for Third Parties. The Novelis arbitration hearing will be confidential and (presumably) governed by a protective order. In contrast, during a federal court trial, third party customers and competitors of the merging parties often must testify publicly in open court (or at least, must reveal their views to the parties or their counsel under a protective order). In this regard, confidential arbitration appears to eliminate the need to grapple with complex and sensitive confidentiality issues that arise during trial. By the same token, federal court opinions generated by these cases provide valuable insights and precedents for future antitrust cases. To the extent that confidential arbitration becomes more prevalent, there may be fewer such opinions. ____________________    [1]   15 U.S.C. § 18.    [2]   Novelis to Acquire Downstream Aluminum Producer Aleris, July 26, 2018, available at: http://investors.novelis.com/2018-07-26-Novelis-to-Acquire-Downstream-Aluminum-Producer-Aleris.    [3]   Complaint, United States v. Novelis, Inc., 1:19-CV-02033, Dkt. 1, (N.D. Ohio Sept. 4, 2019), available at: https://www.justice.gov/opa/press-release/file/1199441/download.    [4]   Justice Department Sues to Block Novelis’s Acquisition of Aleris, Press Release, U.S. Department of Justice, Sept. 4, 2019, available at: https://www.justice.gov/opa/pr/justice-department-sues-block-noveliss-acquisition-aleris-1.    [5]   Plaintiff United States’ Explanation of Plan to Refer This Matter to Arbitration, United States v. Novelis, Inc., 1:19-CV-02033, Dkt. 11, (N.D. Ohio Sept. 9, 2019). The following Gibson Dunn lawyers assisted in preparing this client update: Adam Di Vincenzo, Richard Parker and Chris Wilson. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the authors, the Gibson Dunn lawyer with whom you usually work, or any of the leaders and members of the firm’s Antitrust and Competition practice group: Washington, D.C. D. Jarrett Arp (+1 202-955-8678, jarp@gibsondunn.com) Adam Di Vincenzo (+1 202-887-3704, adivincenzo@gibsondunn.com) Scott D. Hammond (+1 202-887-3684, shammond@gibsondunn.com) Joshua Lipton (+1 202-955-8226, jlipton@gibsondunn.com) Richard G. Parker (+1 202-955-8503, rparker@gibsondunn.com) Cynthia Richman (+1 202-955-8234, crichman@gibsondunn.com) Jeremy Robison (+1 202-955-8518, wrobison@gibsondunn.com) Brian K. Ryoo (+1 202-887-3746, bryoo@gibsondunn.com) Chris Wilson (+1 202-955-8520, cwilson@gibsondunn.com) New York Eric J. Stock (+1 212-351-2301, estock@gibsondunn.com) Los Angeles Daniel G. Swanson (+1 213-229-7430, dswanson@gibsondunn.com) Samuel G. Liversidge (+1 213-229-7420, sliversidge@gibsondunn.com) Jay P. Srinivasan (+1 213-229-7296, jsrinivasan@gibsondunn.com) Rod J. Stone (+1 213-229-7256, rstone@gibsondunn.com) San Francisco Rachel S. Brass (+1 415-393-8293, rbrass@gibsondunn.com) Trey Nicoud (+1 415-393-8308, tnicoud@gibsondunn.com) Dallas M. Sean Royall (+1 214-698-3256, sroyall@gibsondunn.com) Olivia Adendorff (+1 214-698-3159, oadendorff@gibsondunn.com) Veronica S. Lewis (+1 214-698-3320, vlewis@gibsondunn.com) Mike Raiff (+1 214-698-3350, mraiff@gibsondunn.com) Brian Robison (+1 214-698-3370, brobison@gibsondunn.com) Robert C. Walters (+1 214-698-3114, rwalters@gibsondunn.com) Denver Richard H. Cunningham (+1 303-298-5752, rhcunningham@gibsondunn.com) Ryan T. Bergsieker (+1 303-298-5774, rbergsieker@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

September 3, 2019 |
Gibson Dunn Adds Competition Partner Christian Riis-Madsen to Brussels Office

Gibson, Dunn & Crutcher LLP is pleased to announce that Christian Riis-Madsen will join the firm’s Brussels office as a partner in the firm’s Antitrust and Competition Practice Group.  Riis-Madsen joins the firm from O’Melveny & Myers. “We are delighted that Christian is joining us,” said Ken Doran, Chairman and Managing Partner of Gibson Dunn.  “He is highly regarded in the Brussels legal and business communities and is well-known to many of our partners and several of our clients.  He has a well-rounded competition practice with deep experience with top multinational technology companies. Moreover, he has demonstrated strong leadership qualities and will complement the strengths of our global Antitrust and Competition Practice Group.” “Christian is a super fit to our existing Brussels practice, both in terms of his great legal skills and his personality,” said Peter Alexiadis, Partner in Charge of the Brussels office.  “Christian has been on our radar for some time.  His reputation in the high tech sector fits very well with our existing client base, while significant synergies also present themselves in the growth of our existing Scandinavian/Nordic practice.” “I am looking forward to working with my new colleagues at Gibson Dunn,” said Riis-Madsen.  “The firm’s premier competition practice and technology clientele are a perfect platform to continue to grow my practice.” About Christian Riis-Madsen Riis-Madsen has a broad competition law practice, advising on antitrust and regulatory matters before the European Commission.  He has advised companies in a variety of industries and has significant experience in the technology sector, including issues related to two-sided markets, online platforms and intellectual property rights. Before joining Gibson Dunn, Riis-Madsen practiced with O’Melveny & Myers from 2004 to 2019 and most recently served as head of the Brussels office.  Prior, he practiced with Norton Rose in Brussels and Kromann Reumert in Copenhagen.  He is admitted to practice in Denmark and Belgium.  He is fluent in Danish, English, French, German, Norwegian and Swedish. He received his B.A. in law in 1998 and his LL.M. in law in 2000 from the University of Copenhagen.

August 15, 2019 |
Gibson Dunn Lawyers Recognized in the Best Lawyers in America® 2020

The Best Lawyers in America® 2020 has recognized 158 Gibson Dunn attorneys in 54 practice areas. Additionally, 48 lawyers were recognized in Best Lawyers International in Belgium, Brazil, France, Germany, Singapore, United Arab Emirates and United Kingdom.

July 26, 2019 |
New UK Prime Minister – what has happened?

Click for PDF Boris Johnson has won the Conservative leadership race and is the new Prime Minister of the UK. Having been supported by a majority of Conservative MPs, this week the former mayor of London won a 66% share (92,153 votes) in the ballot of Conservative party members. Although there is some criticism of the fact that the new Prime Minister has been elected by such a narrow constituency, it is the case that most political parties in the UK now select their leaders by way of a members ballot. As things stand, the UK is due to leave the European Union (EU) at 23:00 GMT on 31 October 2019. Boris Johnson’s new Cabinet, and the 17 related departures, has set a new tone of determination to leave the EU by that date with or without a deal – “no ifs or buts”. Although only 12 of the 31 members of the new Cabinet originally voted to leave the EU, these “Brexiteer” MPs now dominate the senior Cabinet positions. The newly elected President of the European Commission, Ursula von der Leyen, has however indicated she is willing to support another extension to Brexit talks. In Parliament the Conservatives govern in alliance with the Northern Irish DUP and can only stay in power with the support of the House of Commons. Following defections earlier in the year and the recent suspension of a Conservative MP facing criminal charges, the Government now has an overall working majority of only two MPs (and if, as expected, the Conservatives lose a by-election on 1 August, the Government’s working majority will fall to one). A number of the members of Prime Minister May’s Government who resigned before Boris Johnson took office have made it clear that they will do everything they can to prevent the UK leaving without a deal including voting against the Government. There is therefore a heightened prospect of a general election. This theory is supported by the appointment as Special Adviser to the Prime Minister of political strategist Dominic Cummings who was the chief architect of the campaign to leave the EU in 2016. There has been some debate about whether the new Prime Minister would prorogue Parliament (effectively suspending it) to prevent it stopping a no deal Brexit. That would undoubtedly trigger a constitutional crisis but, despite the rhetoric, it feels like an unlikely outcome. Indeed Parliament recently passed a vote to block that happening. It is difficult to tell where the mood of the House of Commons is today compared to earlier in the year when Prime Minister May’s deal was voted down three times. Since then both the Conservative and Labour parties suffered significant losses in the EU election in May. The new Brexit Party which campaigned to leave made significant gains, as did the Liberal Democrats who have a clear policy to remain in the EU. The opinion polls suggest that, if an election was called today, no party would gain overall control of the House of Commons. It is just possible, however, that some MPs on both sides of the House who previously voted against the May deal would now support something similar, particularly to avoid a no-deal exit from the EU. It may be the case that Boris Johnson, who led the campaign to leave the EU, is the last chance those supporting Brexit have to get Brexit through Parliament. If he fails then either a second referendum or a general election will probably follow. It is not clear what the result of a second referendum would be but it is likely that Labour, the Liberal Democrats and the SNP would all campaign to remain. The EU has consistently said that it will not reopen Prime Minister May’s Withdrawal Agreement although the non-binding political declaration is open to negotiation. The so-called “Irish backstop” remains the most contentious issue. The backstop is intended to guarantee no hard border between Ireland and Northern Ireland but Boris Johnson is concerned it could “trap” the UK in a customs union with the EU. Boris Johnson claims that technology and “trusted trader schemes” means that checks can be made without the need for a hard border. Others, including the EU, remain to be convinced. Parliament has now gone into recess until 3 September 2019 and then, mid-September, there will be another Parliamentary break for the two week party conference season. The Conservative Party Conference on 29 September – a month before the UK’s scheduled exit from the EU – will be a key political moment for the new Prime Minister to report back to the party supporters who elected him. Finally, it is not clear what “no deal” really means. Even if the UK leaves without adopting the current Withdrawal Agreement, it is likely that a series of “mini deals” would be put in place to cover security, air traffic control, etc. A new trading agreement would then still need to be negotiated to establish the ongoing EU-UK relationship. And the issue of the Northern Irish border will still need to be resolved. This client alert was prepared by Charlie Geffen, Ali Nikpay and Anne MacPherson in London. We have a working group in London (led by Patrick Doris, Charlie Geffen, Ali Nikpay and Selina Sagayam) addressing Brexit related issues.  Please feel free to contact any member of the working group or any of the other lawyers mentioned below. Ali Nikpay – Antitrust ANikpay@gibsondunn.com Tel: 020 7071 4273 Charlie Geffen – Corporate CGeffen@gibsondunn.com Tel: 020 7071 4225 Sandy Bhogal – Tax SBhogal@gibsondunn.com Tel: 020 7071 4266 Philip Rocher – Litigation PRocher@gibsondunn.com Tel: 020 7071 4202 Jeffrey M. Trinklein – Tax JTrinklein@gibsondunn.com Tel: 020 7071 4224 Patrick Doris – Litigation; Data Protection PDoris@gibsondunn.com Tel:  020 7071 4276 Alan Samson – Real Estate ASamson@gibsondunn.com Tel:  020 7071 4222 Penny Madden QC – Arbitration PMadden@gibsondunn.com Tel:  020 7071 4226 Selina Sagayam – Corporate SSagayam@gibsondunn.com Tel:  020 7071 4263 Thomas M. Budd – Finance TBudd@gibsondunn.com Tel:  020 7071 4234 James A. Cox – Employment; Data Protection JCox@gibsondunn.com Tel: 020 7071 4250 Gregory A. Campbell – Restructuring GCampbell@gibsondunn.com Tel:  020 7071 4236 © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

July 23, 2019 |
DOJ Antitrust Division Will Now Consider DPAs for Companies Demonstrating “Good Corporate Citizenship”

Click for PDF The DOJ Antitrust Division recently announced that it will allow prosecutors to resolve criminal antitrust investigations with deferred prosecution agreements (“DPAs”) for qualified corporate defendants. Under the Division’s prior policies, the first company or individual to self-report an antitrust violation could qualify for leniency, but the Division required others involved in the conspiracy to plead guilty or face indictment. The Division’s new policy allows for DPAs to be offered when a company has demonstrated the four hallmarks of “good corporate citizenship”: (i) having an effective compliance program, (ii) self-reporting wrongdoing, (iii) cooperating with government investigations, and (iv) remedying past misconduct. In announcing the new policy, Assistant Attorney General Makan Delrahim focused extensively on one aspect of corporate citizenship—corporate compliance programs and their importance in determining whether a company would qualify for a DPA. In conjunction with the new policy, the Antitrust Division also published guidance describing how it will evaluate corporate antitrust compliance programs and how that evaluation will affect charging decisions (including the possibility of a DPA) and sentencing recommendations (such as whether to seek probation or a corporate monitor). This new policy further adds incentives for companies to implement a well-designed, effective antitrust compliance program to detect—and ideally prevent—criminal antirust conduct within an organization. The New Policy As part of every corporate charging decision, the Division will now be required to evaluate ten factors outlined in the Principles of Federal Prosecution of Business Organizations (the so-called Filip Factors listed in the Justice Manual at § 9-28.300) in determining whether to charge a corporate defendant, including whether the company has a robust and effective compliance program. Based on an evaluation of those factors, prosecutors will be allowed to offer DPAs, under which the Division brings charges but agrees not to proceed with prosecution in exchange for the company’s payment of a monetary penalty and commitment to abide by certain requirements or conditions. In evaluating a company’s compliance program, the Division will initially consider whether it prohibited criminal antitrust violations, whether it detected and facilitated prompt reporting of the violation, and to what extent the company’s senior management was involved in the violation. Prosecutors will then evaluate the effectiveness of the compliance program by examining nine factors: (1) design and comprehensiveness; (2) culture of compliance; (3) responsibility for the compliance program; (4) risk assessment; (5) training and communication; (6) periodic review, monitoring, and auditing; (7) reporting; (8) incentives and discipline; and (9) remediation and role of the compliance program in the discovery of the violation. If the Division decides to prosecute a company, its compliance program can still be credited at the sentencing stage. An effective compliance program may, for example, result in a three-point reduction of the culpability score in calculating the recommended sentence under the Guidelines (potentially reducing the company’s fine by millions of dollars), persuade the Division to recommend a corporate fine below the Guidelines range (provided that the defendant provided substantial assistance), or allow the company to avoid probation and a costly corporate monitorship. Significance Availability of DPAs in Criminal Antitrust Investigations. This announcement represents a shift from the Division’s longstanding policy of not offering credit for a compliance program at the charging stage and disfavoring DPAs except in extraordinary cases where criminal prosecution would have jeopardized the defendant’s eligibility to conduct business (see, e.g., financial institutions in the LIBOR case or pharmaceutical manufacturers in the generic drugs investigations). The new policy appears to bring the Antitrust Division’s practice regarding DPAs closer to the Criminal Division’s and may create new options for companies that are not first-in-line leniency applicants. Elements of Effective Compliance Program. The Division’s new guidance recognizes that “no compliance program can ever prevent all criminal activity” and lists nine factors that prosecutors will consider when evaluating the effectiveness of an antitrust compliance program, suggesting that the Division will not view an antitrust violation as an inherent failure of a compliance program. Because this is a significant change from past policy and practice, it remains to be seen whether and how much the Division will credit a compliance program that satisfies many of the nine factors but ultimately fails to prevent or detect a violation. What is clear is that the Division is now placing a premium on the design and implementation of compliance programs such that companies should review their existing antitrust compliance programs and ensure they are consistent with the Division’s new guidance. A copy of the Assistant Attorney General’s remarks can be found at: https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-new-york-university-school-l-0 A copy of the Division’s guidance about corporate compliance programs can be found at: https://www.justice.gov/atr/page/file/1182001/download Gibson Dunn’s 2018 Year-End Update on Corporate Non-Prosecution Agreements and Deferred Prosecution Agreements can be found at: https://www.gibsondunn.com/2018-year-end-npa-dpa-update/ The following Gibson Dunn lawyers assisted in preparing this client update: Scott Hammond, Dan Swanson, Jeremy Robison, Cindy Richman, Rachel Brass, Jarrett Arp, and Brian Ryoo. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the authors, the Gibson Dunn lawyer with whom you usually work, or any of the leaders and members of the firm’s Antitrust and Competition or White Collar Defense and Investigations practice groups: Antitrust and Competition Group: Washington, D.C. D. Jarrett Arp (+1 202-955-8678, jarp@gibsondunn.com) Adam Di Vincenzo (+1 202-887-3704, adivincenzo@gibsondunn.com) Scott D. Hammond (+1 202-887-3684, shammond@gibsondunn.com) Joshua Lipton (+1 202-955-8226, jlipton@gibsondunn.com) Richard G. Parker (+1 202-955-8503, rparker@gibsondunn.com) Cynthia Richman (+1 202-955-8234, crichman@gibsondunn.com) Jeremy Robison (+1 202-955-8518, wrobison@gibsondunn.com) Brian K. Ryoo (+1 202-887-3746, bryoo@gibsondunn.com) Chris Wilson (+1 202-955-8520, cwilson@gibsondunn.com) New York Eric J. Stock (+1 212-351-2301, estock@gibsondunn.com) Los Angeles Daniel G. 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Hammond (+1 202-887-3684, shammond@gibsondunn.com) Stephanie L. Brooker (+1 202-887-3502, sbrooker@gibsondunn.com) M. Kendall Day (+1 202-955-8220, kday@gibsondunn.com) David Debold (+1 202-955-8551, ddebold@gibsondunn.com) Stuart F. Delery (+1 202-887-3650, sdelery@gibsondunn.com) Michael Diamant (+1 202-887-3604, mdiamant@gibsondunn.com) John W.F. Chesley (+1 202-887-3788, jchesley@gibsondunn.com) Daniel P. Chung (+1 202-887-3729, dchung@gibsondunn.com) Patrick F. Stokes (+1 202-955-8504, pstokes@gibsondunn.com) New York Reed Brodsky (+1 212-351-5334, rbrodsky@gibsondunn.com) Joel M. Cohen (+1 212-351-2664, jcohen@gibsondunn.com) Mylan L. Denerstein (+1 212-351-3850, mdenerstein@gibsondunn.com) Lee G. Dunst (+1 212-351-3824, ldunst@gibsondunn.com) Barry R. Goldsmith (+1 212-351-2440, bgoldsmith@gibsondunn.com) Christopher M. Joralemon (+1 212-351-2668, cjoralemon@gibsondunn.com) Mark A. Kirsch (+1 212-351-2662, mkirsch@gibsondunn.com) Randy M. 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Fagel (+1 415-393-8332, mfagel@gibsondunn.com) Charles J. Stevens (+1 415-393-8391, cstevens@gibsondunn.com) Michael Li-Ming Wong (+1 415-393-8234, mwong@gibsondunn.com) Winston Y. Chan (+1 415-393-8362, wchan@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

June 20, 2019 |
Webcast: Dealing with Online Markets and Digital Services from a Competition Law Perspective

Joined by Jorge Padilla (Compass Lexecon), our Gibson Dunn panel considers current and emerging trends in the EU and Asia in online markets and digital services. Topics to be Discussed The starting point – the role of data (an EU perspective) Digital Platforms and market power issues in the EU An emerging competition issue – High Tech enters the banking sector Recent German initiatives The emerging Asian experience PANELISTS: Peter Alexiadis is an Irish qualified solicitor who has practised Community law in Brussels since 1989. He is a Visiting Professor at Kings College, London, where he teaches the LLM course “Competition Law & Regulated Network Sectors”. His competition practice focuses on merger control, abuse of dominance actions, complaints under the State aids rules, and vertical distribution and IP licensing practices. Peter has been listed as “2014-2015 Brussels Media Lawyer of the Year” and the “2018 Brussels Telecommunications Lawyer of the Year” in Best Lawyers International. David Wood is an English and Belgian qualified partner in the Brussels office of Gibson Dunn and co-chairs the Firm’s Antitrust and Competition Practice Group. Mr. Wood’s practice encompasses the full range of antitrust issues, including cartels, merger control, abuse of dominance (monopolization), restrictive agreements, sector inquiries and private enforcement. He has strong knowledge in the financial services, media/high-tech, and transport sectors and previously held a number of senior positions in DG Competition of the European Commission. Jens-Olrik Murach is a German qualified partner and a member of the Brussels Bar with almost 20 years of experience practicing antitrust law in both Brussels and Germany. Mr. Murach’s practice covers the complete range of EU and German antitrust issues, including merger control, restrictive practices, market dominance, cartel investigations, sectoral investigations, compliance and antitrust litigation. Sébastien Evrard is a partner in the Hong Kong office of Gibson Dunn. He is a member of the Firm’s Antitrust and Competition Practice Group. Mr. Evrard handles complex antitrust matters in Asia. He is a co-author of Anti-Monopoly Law and Practice in China, the leading English treatise on China’s competition law. Dr. Jorge Padilla is Senior Managing Director and Head of Compass Lexecon Europe. Dr. Padilla has given expert testimony before the competition authorities and courts of several EU member states, as well as in cases before the European Commission. Dr. Padilla has also given expert testimony in various civil litigation (damages), international arbitration cases, and competition cases in non-EU jurisdictions (Argentina, Chile, China, Colombia, India, Israel, Jamaica, South Africa and Turkey). He is also a Research Fellow at the Centro de Estudios Monetarios y Financieros (CEMFI, Madrid) and teaches competition economics at the Barcelona Graduate School of Economics (BGSE). MCLE CREDIT INFORMATION: This program has been approved for credit in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 1.0 credit hour, of which 1.0 credit hour may be applied toward the areas of professional practice requirement. This course is approved for transitional/non-transitional credit. Attorneys seeking New York credit must obtain an Affirmation Form prior to watching the archived version of this webcast. Please contact Jeanine McKeown (National Training Administrator), at 213-229-7140 or jmckeown@gibsondunn.com to request the MCLE form. Gibson, Dunn & Crutcher LLP certifies that this activity has been approved for MCLE credit by the State Bar of California in the amount of 1.0 hour. California attorneys may claim “self-study” credit for viewing the archived version of this webcast.  No certificate of attendance is required for California “self-study” credit. © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

June 7, 2019 |
Nineteen Gibson Dunn attorneys recognized by Who’s Who Legal Competition 2019

Nineteen Gibson Dunn attorneys were recognized by Who’s Who Legal Competition 2019. Brussels partners Peter Alexiadis, Jens-Olrik Murach and David Wood and associates Attila Borsos and Elsa Sependa; Dallas partners M. Sean Royall and Robert Walters; Hong Kong partner Sébastien Evrard; London partner Ali Nikpay; Los Angeles partner Daniel Swanson; San Francisco partners Rachel Brass, Trey Nicoud and Gary Spratling; and Washington, D.C. partners D. Jarrett Arp, Adam Di Vincenzo, Scott Hammond, Joseph Kattan, Richard Parker and Cynthia Richman were recognized. The list was published in June 2019.

May 23, 2019 |
Webcast: Is It Bad To Be Big? An Antitrust Update On Monopoly Law And Enforcement

The topic of monopoly is in the news almost every day. Join us for a look behind the headlines to understand what you need to know about the current state of Sherman Act Section 2 monopolization law and enforcement. Our panel includes seasoned Gibson Dunn antitrust litigators and appellate advocates, former FTC and DOJ officials, and a leading antitrust economist. View Slides (PDF) PANELISTS: Thomas G. Hungar is a partner in the Washington, D.C. office of Gibson, Dunn & Crutcher and a member of the firm’s Appellate and Constitutional Law and Antitrust and Competition Practice Groups. His practice focuses on appellate litigation, and he assists clients with congressional investigations and complex trial court litigation matters as well. He has presented oral arguments before the Supreme Court of the United States in 26 cases, including some of the Court’s most important patent, antitrust, securities, and environmental law decisions, and he has also appeared before numerous lower federal and state courts. Mr. Hungar served as General Counsel to the U.S. House of Representatives from July 2016 until January 2019, when he rejoined the firm. Previously, he served as a Deputy Solicitor General of the United States. Janusz A. Ordover is an Emeritus Professor of Economics and a former Director of the Masters in Economics Program at New York University where he taught since 1973. He served as the Deputy Assistant Attorney General for Economics in the Antitrust Division of the U.S. Department of Justice under President George H. W. Bush. While at the Antitrust Division, Professor Ordover served on the White House de-regulation task force, guided economic analyses of antitrust enforcement and acted as a liaison between the Justice Department and various regulatory agencies. At the Division, he was one of the main drafters of the 1992 Horizontal Merger Guidelines. Professor Ordover served as an advisor to the Organization for Economic Cooperation and Development (OECD) in Paris, the World Bank, and the Inter-American Bank for Development on matters of privatization, regulation, international trade policy, and competition policy. He has advised the governments of Poland, Czech Republic, Russia, Hungary, Argentina, and others on regulation and competition matters, as well as on privatization strategies. Richard Parker is a partner in the Washington, D.C. office of Gibson, Dunn & Crutcher and a member of the firm’s Antitrust and Competition Practice Group. Mr. Parker is a leading antitrust lawyer who has successfully represented clients before both enforcement agencies and the courts. As a trial lawyer and an antitrust regulatory lawyer, Mr. Parker has been involved in many major antitrust representations, including merger clearance cases, cartel matters, class actions, and government civil investigations. He has extensive experience representing clients in matters before the Federal Trade Commission (FTC) and the U.S. Department of Justice Antitrust Division. From 1998 to 2001, he served as the Senior Deputy Director and then as Director of the Bureau of Competition at the FTC. Cindy Richman is a partner in the Washington, D.C. office of Gibson, Dunn & Crutcher and Co-Partner-in-Charge of the office. Ms. Richman has experience handling a wide variety of antitrust matters in a broad range of industries, including in high-technology products. Who’s Who Legal has repeatedly named Ms. Richman a “Future Leader” in Competition, noting that she is known for her “impressive advocacy skills” and “strong track record in important cases.” Her practice includes defending companies before state and federal courts, including appellate courts, in matters alleging a range of antitrust-based claims. Ms. Richman has particular expertise defending against monopolization and attempted monopolization claims, including those based on allegations of exclusive dealing, refusal to deal, and predatory pricing. Daniel G. Swanson is a partner in the Los Angeles and Brussels offices of Gibson, Dunn & Crutcher and Co-Chairs the firm’s Antitrust and Competition Practice Group. Mr. Swanson is a member of the California and Brussels Bars and holds a Ph.D. in economics from Harvard University. As a trial and appellate litigator, he has been involved in numerous antitrust matters involving claims of monopolization and dominance, including some of the most significant Section 2 cases of the last several decades. He frequently represents clients in matters involving technology and intellectual property. Chambers USA has reported that “Daniel Swanson has a vast amount of antitrust expertise covering everything from merger investigations to civil and criminal litigation” and has described him as “a highly regarded trial lawyer with a wealth of experience” and as “a ‘tough opponent’ in civil and criminal litigation, alleged cartel matters and IP-related issues.” MCLE INFORMATION: This program has been approved for credit in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 1.0 credit hour, of which 1.0 credit hour may be applied toward the areas of professional practice requirement. This course is approved for transitional/non-transitional credit. Attorneys seeking New York credit must obtain an Affirmation Form prior to watching the archived version of this webcast. Please contact Jeanine McKeown (National Training Administrator), at 213-229-7140 or jmckeown@gibsondunn.com to request the MCLE form. This program has been approved for credit in accordance with the requirements of the Texas State Bar for a maximum of 1.0 credit hour, of which 1.0 credit hour may be applied toward the area of accredited general requirement. Attorneys seeking Texas credit must obtain an Affirmation Form prior to watching the archived version of this webcast. Please contact Jeanine McKeown (National Training Administrator), at 213-229-7140 or jmckeown@gibsondunn.com to request the MCLE form. Gibson, Dunn & Crutcher LLP certifies that this activity has been approved for MCLE credit by the State Bar of California in the amount of 1.0 hour. California attorneys may claim “self-study” credit for viewing the archived version of this webcast.  No certificate of attendance is required for California “self-study” credit.

May 14, 2019 |
Supreme Court Holds That iPhone Users Have Standing To Seek Federal Antitrust Damages From Apple For App Store Purchases

Click for PDF Decided May 13, 2019 Apple, Inc. v. Pepper, No. 17-204 Yesterday, the Supreme Court held 5-4 that iPhone users are “direct purchasers” from Apple when they purchase apps on Apple’s App Store, and thus have standing to sue Apple for alleged monopolistic overcharges under Section 2 of the Sherman Act, even though third-party app developers pay for the allegedly monopolized app-distribution services and set the prices for apps charged to iPhone users. Background: A group of iPhone users sued Apple for damages under Section 2 of the Sherman Act, alleging that Apple monopolized the retail market for the sale of apps and unlawfully used its monopoly power to charge consumers higher-than-competitive prices. According to plaintiffs, Apple requires them to purchase iPhone apps from developers exclusively through Apple’s App Store. Although app developers independently set the retail price of each app, Apple charges developers a yearly fee to place their apps in the App Store, along with a commission on each sale. The iPhone users alleged that this arrangement caused them to pay inflated prices for apps and sought antitrust damages from Apple. Under Illinois Brick Co. v. Illinois, 431 U.S. 720, 729 (1977), only direct purchasers, “and not others in the chain of manufacture or distribution,” can sue for damages under federal antitrust law. The district court dismissed the action under Illinois Brick, reasoning that the app developers were the direct purchasers of Apple’s app-distribution services because they paid the annual fees and commissions charged by Apple. The Ninth Circuit reversed, holding that the iPhone users could sue Apple for allegedly monopolizing and attempting to monopolize the sale of iPhone apps. Issue: “Whether consumers may sue anyone who delivers goods to them for antitrust damages, even when they seek damages based on prices set by third parties who would be the immediate victims of the alleged offense.” Court’s Holding: Yes. Illinois Brick does not bar plaintiffs’ claim for alleged monopoly overcharge damages because iPhone users are properly regarded as direct purchasers. “The [plaintiffs] pay the alleged overcharge directly to [defendant]. The absence of an intermediary is dispositive. Under Illinois Brick, the [plaintiffs] are direct purchasers … and are proper plaintiffs to maintain this antitrust suit.” Justice Kavanaugh, writing for the majority What It Means: The Court’s decision embraces a formal approach to antitrust standing in a claim arising under Section 2 of the Sherman Act that focuses on whether the plaintiff directly contracts with the alleged monopolist, irrespective of whether it directly bears the cost of the alleged monopolistic conduct. In doing so, the decision creates the risk that companies operating “electronic marketplaces” will be subject to suit by both the third-party sellers who pay to use the companies’ services and to end-consumers who purchase the third party’s products or services on the platform. The decision threatens to increase the cost and complexity of antitrust litigation, as courts may be required to engage in the complex task of apportioning antitrust damages among different levels of purchasers of a good or service. Justice Gorsuch, writing for a four-Justice dissent, highlighted some of the difficult questions lower courts must now address, including whether and to what extent third parties pass on alleged monopolistic charges, a question that will need to be addressed as to “all of the tens of thousands of developers who sold apps through the App Store at different prices and times over the course of years.” These increased litigation costs may have a negative financial impact on the e-commerce space as a whole. The Court was careful to note that it was not “assess[ing] the merits of the plaintiffs’ antitrust claims” or any “defenses Apple may have.” Having established standing, plaintiffs must now face the challenge of showing how a claim of charging “too much” overcomes Supreme Court precedent disapproving such claims. The Court’s decision raises the question whether it might overrule Illinois Brick in the future.  Although certain amici argued that the Court should do so here, the Court reasoned that “[i]n light of our ruling in favor of the plaintiffs in this case, we have no occasion to consider that argument.” Time will tell whether the Supreme Court’s formal approach to standing under Section 2 will carry over into substantive Section 1 analysis, e.g., requiring a reevaluation of principal-agent relationships that are not subject to Section 1 strictures under longstanding precedent. Gibson Dunn will be hosting a webcast on the current state of monopoly law and enforcement, including the impact of this decision, on May 23, 2019.  For more details, please click here.  As always, Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders: Appellate and Constitutional Law Practice Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com Theodore J. Boutrous, Jr. +1 213.229.7804 tboutrous@gibsondunn.com Related Practice: Antitrust and Competition Scott D. Hammond +1 202.887.3684 shammond@gibsondunn.com M. Sean Royall +1 214.698.3256 sroyall@gibsondunn.com Daniel G. Swanson +1 213.229.7430 dswanson@gibsondunn.com

April 25, 2019 |
Gibson Dunn Earns 79 Top-Tier Rankings in Chambers USA 2019

In its 2019 edition, Chambers USA: America’s Leading Lawyers for Business awarded Gibson Dunn 79 first-tier rankings, of which 27 were firm practice group rankings and 52 were individual lawyer rankings. Overall, the firm earned 276 rankings – 80 firm practice group rankings and 196 individual lawyer rankings. Gibson Dunn earned top-tier rankings in the following practice group categories: National – Antitrust National – Antitrust: Cartel National – Appellate Law National – Corporate Crime & Investigations National – FCPA National – Outsourcing National – Real Estate National – Retail National – Securities: Regulation CA – Antitrust CA – Environment CA – IT & Outsourcing CA – Litigation: Appellate CA – Litigation: General Commercial CA – Litigation: Securities CA – Litigation: White-Collar Crime & Government Investigations CA – Real Estate: Southern California CO – Litigation: White-Collar Crime & Government Investigations CO – Natural Resources & Energy DC – Corporate/M&A & Private Equity DC – Labor & Employment DC – Litigation: General Commercial DC – Litigation: White-Collar Crime & Government Investigations NY – Litigation: General Commercial: The Elite NY – Media & Entertainment: Litigation NY – Technology & Outsourcing TX – Antitrust This year, 155 Gibson Dunn attorneys were identified as leading lawyers in their respective practice areas, with some ranked in more than one category. The following lawyers achieved top-tier rankings:  D. Jarrett Arp, Theodore Boutrous, Jessica Brown, Jeffrey Chapman, Linda Curtis, Michael Darden, William Dawson, Patrick Dennis, Mark Director, Scott Edelman, Miguel Estrada, Stephen Fackler, Sean Feller, Eric Feuerstein, Amy Forbes, Stephen Glover, Richard Grime, Daniel Kolkey, Brian Lane, Jonathan Layne, Karen Manos, Randy Mastro, Cromwell Montgomery, Daniel Mummery, Stephen Nordahl, Theodore Olson, Richard Parker, William Peters, Tomer Pinkusiewicz, Sean Royall, Eugene Scalia, Jesse Sharf, Orin Snyder, George Stamas, Beau Stark, Charles Stevens, Daniel Swanson, Steven Talley, Helgi Walker, Robert Walters, F. Joseph Warin and Debra Wong Yang.

April 19, 2019 |
Gibson Dunn Ranked in Legal 500 EMEA 2019

The Legal 500 EMEA 2019 has recommended Gibson Dunn in 14 categories in Belgium, France, Germany and UAE.  The firm was recognized in Competition – EU and Global in Belgium; Administrative and Public Law, Dispute Resolution – Commercial Litigation Industry Focus – IT, Telecoms and the Internet, Insolvency, Insurance, Mergers and Acquisitions, and Tax in France; Antitrust, Compliance, Internal Investigations and Private Equity in Germany; and Corporate and M&A and Investment Funds in UAE. Chézard Ameer, Ahmed Baladi,  Jean-Pierre Farges and Dirk Oberbracht were all recognized as Leading Individuals. Jérôme Delaurière was listed as a “Next Generation Lawyer.”  

March 26, 2019 |
Global Competition Review Recognizes Gibson Dunn for Merger Control Matter of the Year

Global Competition Review has named the AT&T/Time Warner matter as the “Merger Control Matter of the Year – Americas” at its annual GCR Awards. Gibson Dunn was counsel to AT&T. The awards were presented on March 26, 2019.

March 8, 2019 |
Gibson Dunn Ranked in Chambers Europe 2019

Gibson Dunn received 30 rankings in Chambers Europe 2019: 22 individual rankings and eight firm rankings. The firm was recommended in the following categories: Competition/European Law – Belgium; Corporate Investigations – Europe-wide; Corporate/M&A: High-End Capability – France; Restructuring/Insolvency – France; TMT: Information Technology – France; Compliance – Germany; Corporate/M&A: High-End Capability – Germany; Dispute Resolution: White-Collar Crime: Corporate Advisory – Germany. The following Gibson Dunn partners were recognized as leaders in their fields: Peter Alexiadis, Ahmed Baladi, Sandy Bhogal, Jérôme Delaurière, Jean-Pierre Farges, Benoît Fleury, Charlie Geffen, Ariel Harroch, Chris Haynes, Ali Nikpay, Dirk Oberbracht, Wilhelm Reinhardt, Sebastian Schoon, Benno Schwarz, Steve Thierbach, David Wood, and Finn Zeidler.

February 19, 2019 |
FTC Publishes Revised Hart-Scott-Rodino Notification Thresholds for 2019

Click for PDF On February 15, 2019, the Federal Trade Commission announced its annual update of the thresholds for pre-merger notifications of M&A transactions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”).  Pursuant to the HSR Act, these thresholds are updated annually to account for changes in gross national product. The size of transaction threshold for reporting proposed mergers and acquisitions under Section 7A of the Clayton Act will increase by $5.6 million, from $84.4 million in 2018 to $90 million in 2019.  The new thresholds, the issuance of which were delayed due to the government shutdown, are expected to take effect in March, 30 days after notice is published in the Federal Register. Original Threshold Current Threshold Revised Threshold $10 million $16.9 million $18 million $50 million $84.4 million $90 million $100 million $168.8 million $180 million $110 million $185.7 million $198 million $200 million $337.6 million $359.9 million $500 million $843.9 million $899.8 million $1 billion $1.6878 billion $1.7995 billion The maximum fine for violations of the HSR Act has increased from $41,484 per day to $42,530. The amounts of the filing fees have not changed, but the thresholds that trigger each fee have been increased: Fee Size of Transaction $45,000 Valued at more than $90 million but less than $180 million $125,000 Valued at $180 million or more but less than $899.8 million $280,000 Valued at $899.8 million or more The 2019 thresholds triggering prohibitions on certain interlocking directorates on corporate boards of directors are $36,564,000 for Section 8(a)(l) and $3,656,400 for Section 8(a)(2)(A).  The Section 8 thresholds take effect upon publication in the Federal Register. If you have any questions about the new HSR size of transaction thresholds, or HSR and antitrust/competition regulations and rulemaking more generally, please contact any of the partners or counsel listed below. The following Gibson Dunn lawyers assisted in preparing this client update: Adam Di Vincenzo, Andrew Cline and Chris Wilson. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding the HSR Act or antitrust issues raised by business transactions. To learn more about these issues, please feel free to contact any of the following practice group leaders and members: Washington, D.C. D. Jarrett Arp (+1 202-955-8678, jarp@gibsondunn.com) Adam Di Vincenzo (+1 202-887-3704, adivincenzo@gibsondunn.com) Scott D. Hammond (+1 202-887-3684, shammond@gibsondunn.com) Joshua Lipton (+1 202-955-8226, jlipton@gibsondunn.com) Richard G. Parker (+1 202-955-8503, rparker@gibsondunn.com) Cynthia Richman (+1 202-955-8234, crichman@gibsondunn.com) Jeremy Robison (+1 202-955-8518, wrobison@gibsondunn.com) Andrew Cline (+1 202-887-3698, acline@gibsondunn.com) Chris Wilson (+1 202-955-8520, cwilson@gibsondunn.com) New York Eric J. Stock (+1 212-351-2301, estock@gibsondunn.com) Los Angeles Daniel G. Swanson (+1 213-229-7430, dswanson@gibsondunn.com) Samuel G. Liversidge (+1 213-229-7420, sliversidge@gibsondunn.com) Jay P. Srinivasan (+1 213-229-7296, jsrinivasan@gibsondunn.com) Rod J. Stone (+1 213-229-7256, rstone@gibsondunn.com) San Francisco Rachel S. Brass (+1 415-393-8293, rbrass@gibsondunn.com) Trey Nicoud (+1 415-393-8308, tnicoud@gibsondunn.com) Dallas M. Sean Royall (+1 214-698-3256, sroyall@gibsondunn.com) Olivia Adendorff (+1 214-698-3159, oadendorff@gibsondunn.com) Veronica S. Lewis (+1 214-698-3320, vlewis@gibsondunn.com) Mike Raiff (+1 214-698-3350, mraiff@gibsondunn.com) Brian Robison (+1 214-698-3370, brobison@gibsondunn.com) Robert C. Walters (+1 214-698-3114, rwalters@gibsondunn.com) Denver Richard H. Cunningham (+1 303-298-5752, rhcunningham@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

February 11, 2019 |
Antitrust in China – 2018 Year in Review

Click for PDF 2018 marked the tenth anniversary of the Anti-Monopoly Law (“AML”). The main highlight of the year is the major re-organisation of China’s antitrust enforcement agencies. China merged its three antitrust regulators into a single entity, which now oversees all mergers, pricing and non-pricing issues. This move brought to an end China’s unique tripartite system, which had been criticized for its fragmented enforcement and arbitrary assignment of duties. The integration of China’s antitrust enforcement agencies is expected to result in a better allocation of resources and more consistent decision-making in the long term, which in turn, should increase the level of enforcement and transparency. This client alert highlights the most significant developments from 2018 and what to expect for 2019. 1.    Legislative/Regulatory Developments Establishment of the State Administration for Market Regulation. On March 21, 2018, China merged its existing three antitrust regulators into a single entity called the State Administration for Market Regulation (“SAMR”). The SAMR is directly supervised by the State Council of China and officially began its operations in April 2018. In addition to overseeing food and drug administration, intellectual property and product quality, the SAMR undertakes all the antitrust responsibilities previously held by the National Development and Reform Commission (“NDRC”), the Ministry of Commerce (“MOFCOM”) and the State Administration for Industry and Commerce (“SAIC”). The re-organisation of China’s antitrust regulators forms part of the Chinese State Council’s Institutional Reform Plan as well as President Xi Jinping’s wider policy goals, which include strengthening the government’s market supervision capability. The SAMR consists of 27 “bureaus”, two of which now oversee antitrust enforcement. The Anti-monopoly Bureau is responsible for (1) carrying out antitrust investigations and taking enforcement actions against violations of the AML, including monopoly agreements, abuse of dominance and abuse of administrative power; (2) conducting merger review; (3) drafting and implementing anti-monopoly rules and guidelines; (4) ensuring fair competition review mechanisms; and (5) providing guidance to Chinese enterprises on responding to and coping with antitrust investigations and competition litigation in foreign jurisdictions. The Price Supervision and Anti-Unfair Competition Bureau is in charge of enforcing the Anti-unfair Competition Law and Price Law, which previously fell under the ambit of the NDRC and the SAIC. In particular, the Price Supervision and Anti-Unfair Competition Bureau is responsible for (1) formulating guidelines and regulations on price supervision and anti-unfair competition; (2) supervising the prices of goods and services; (3) carrying out investigations and enforcement actions against unfair pricing and unfair competition; and (4) regulating direct selling enterprises and agents and cracking down on pyramid schemes. Throughout 2018, the SAMR has been reforming and consolidating local Administration for Market Regulation (“AMR”) offices at a provincial level and is expected to release further details regarding the integration of local enforcement teams in 2019. New Merger Control Guidelines. On September 29, 2018, the SAMR issued a new set of merger control guidelines, which replaced the guidelines previously issued by MOFCOM. These guidelines include: (1) Guiding Opinions on the Notification of the Concentration of Undertakings; (2) Guiding Opinions on Documents and Materials Required for the Notification of Undertakings; (3) Working Guidance for Anti-monopoly Review on Concentration of Undertakings; (4) Explanation on the Implementation of the Notification Form for Anti-Monopoly Review of Concentration of Undertakings; (5) Guiding Opinions on the Notification of Concentration of Undertakings Subject to Simplified Procedure; and (6) Guiding Opinions on Regulating the Titles of Cases on the Notification of Concentrations of Undertakings. The updated guidelines contain minor changes to the guidelines previously issued by MOFCOM. Antitrust Guidelines on the Abuse of Intellectual Property Rights. On November 19, 2018, the SAMR adopted the “Anti-Monopoly Guidelines on the Abuse of Intellectual Property Rights”. The guidelines were jointly produced by China’s three antitrust enforcement agencies and the State Intellectual Property Office, before they were merged into the SAMR. As explained in our Antitrust in China – 2017 Year in Review[1], the guidelines (1) introduce a case-specific analytical framework to determine whether an undertaking’s exercise of its IP rights is anti-competitive;  (2) address the definition of the relevant market and provide that, in some cases, it may be appropriate to consider the relevant technology market (as opposed to the relevant product market); and (3) introduce a safe harbour provision in respect of certain agreements that would otherwise fall foul of the AML. The guidelines will be formally issued and promulgated in 2019. Other Antitrust Guidelines. In addition to the Antitrust Guidelines on the Abuse of Intellectual Property Rights, the SAMR approved three other Antitrust Guidelines, namely: (1) Antitrust Guidelines for the Automotive Sector; (2) Guidelines regarding Exemption of Monopoly Agreements; and (3) Guidelines regarding Leniency Application for Horizontal Monopoly Agreements. Along with the Antitrust Guidelines on the Abuse of Intellectual Property Rights, these three guidelines will come into force during the course of 2019. According to Director General (“DG”) Wu Zhenguo, these guidelines have been drafted “in an effort to share [the SAMR’s] law enforcement ideas and experience with business operators, stabilize their expectations, and improve the transparency of law enforcement.”[2] Potential Amendments to the AML. In 2017, China’s antitrust enforcement agencies and legislators commenced their work to revise the AML. A draft revision of the AML was prepared in 2018, but it is unclear when the first draft will be released for consultation and come into force. If implemented, these revisions would constitute the first amendments to the AML in its ten-year life. According to DG Wu Zhenguo, the SAMR will focus on improving the existing legal provisions in the AML “so they may be adapted to the development and changes of both the national and global economic environments.”[3] Expected revisions include an increase in the financial penalty for failure to notify (currently capped at RMB 500,000) and an elucidation of Article 14 in relation to retail price maintenance. Integration of the NDRC and SAIC’s Provisions. The SAMR plans to streamline its substantive rules and procedural requirements in the areas of monopoly agreements, abuse of market dominance and administrative monopolies by integrating the regulations issued by the SAIC and NDRC in these areas. The SAMR plans to integrate the “Provisions Against Price Fixing” of the NDRC with the “Provisions for the Industry and Commerce Administrations on the Prohibition of Monopoly Agreements” and the “Provisions for the Industry and Commerce Administrations on the Prohibition of Abuse of Dominant Market Position” of the SAIC. It will also integrate the “Provisions on the Administrative Procedures for Law Enforcement Against Price Fixing” of the NDRC with the “Provisions for the Administrative Departments for Industry and Commerce to Investigate and Handle Monopoly Agreements and Abuse of Dominant Market Position” of the SAIC. 2.    Merger Control In 2018, the SAMR (and its predecessor MOFCOM) reviewed a total of 441 concentrations, which represents a 36% increase from 2017.[4] As of October 2018, the SAMR (and its predecessor MOFCOM) received a total of 2,420 notifications since the promulgation of the AML, amongst which 2,380 were approved unconditionally, 2 were prohibited and 38 were approved subject to remedies.[5] As part of its reorganisation mandate, the SAMR sought to make the merger review process more efficient. The SAMR now has three dedicated Merger Control Divisions, which are divided according to industries. As of Q4 2018, the SAMR took an average of 15.6 days to review and approve a filing after it is formally submitted under the simplified procedure.[6] In addition, the SAMR now aims to reduce the length of merger reviews by issuing requests for information within 5 days of receiving the parties’ filing.[7] Published Decisions. Only those SAMR decisions prohibiting a transaction, or imposing or removing remedies are published. In 2018, the SAMR (and its predecessor MOFCOM) imposed remedies in a number of high-profile cases. It required structural remedies in all conditionally approved cases in 2018, save for Essilor/Luxotica, in which it required only behavioural remedies. On March 13, 2018, Bayer secured MOFCOM’s conditional approval for its proposed acquisition of Monsanto, a US agrochemical and agricultural biotechnology corporation. MOFCOM required Bayer to (1) divest a number of its businesses and assets globally, including its vegetable and seeds business; and (2) grant “fair, reasonable and non-discriminatory access” to the merged entity’s digital agricultural platforms in China for five years after the merged entity’s entry to the Chinese market. The ongoing Sino-US trade war had consequences for US companies seeking merger clearance in China. On July 25, 2018, US chip maker Qualcomm announced that it would cease its proposed 44 billion US dollar takeover of NXP Semiconductor (“NXP”) after it failed to secure the SAMR’s approval by the deadline set out in the transaction documents. Chinese stakeholders voiced their concerns regarding Qualcomm’s expansion into strategic sectors, such as mobile payments, and commentators noted that the decision was likely influenced by the Chinese government’s mandate to ensure that domestic companies have access to key inputs, including intellectual property rights. Since the deal was announced in October 2016, the deadline for closing had been extended numerous times and Qualcomm had obtained approval from all jurisdictions save for China. As a result, Qualcomm paid NXP a termination fee of 2 billion US dollars. Qualcomm’s Chief Executive Officer Steve Mollenkopf stated, “there were probably bigger forces at play here than just us.”[8] On July 26, 2018, the SAMR conditionally approved the merger between Essilor, a French lens manufacturer and Luxottica, an Italian eyewear manufacturer. Pursuant to the conditions imposed by the SAMR, the merged entity must not sell eyewear products at below cost prices without a justified reason; refrain from engaging in tie-in sales or imposing exclusivity requirements on retailers; and ensure the availability of all products and services to customers in China on a fair basis. On September 30, 2018, the SAMR conditionally approved the merger between Linde, a German chemicals company and Praxair, an American industrial gases company. The SAMR imposed six conditions, which included the following: (1) the parties must divest helium assets with an annual production volume of 90 million cubic feet; (2) Linde must divest its stakes in four joint ventures in Guangdong province; and (3) the parties must provide a timely and stable supply of certain gas products to Chinese customers at reasonable prices and volumes. On November 23, 2018, the SAMR conditionally approved industrial equipment manufacturer United Technologies Corporation’s takeover of Rockwell Collins, a manufacturer of aircraft parts. The SAMR required United Technologies Corporation to divest its research projects on oxygen systems, which could be in direct competition with an existing product of Rockwell Collins. This is not the first time that the Chinese regulator required parties to divest a business line or an R&D project to address its concerns that the merged entity would have a reduced incentive to innovate. As reported in our Antitrust in China – 2017 Year in Review[9], in Becton Dickinson/C.R. Bard, MOFCOM required Becton Dickinson to divest its soft core needle biopsy device business, as this could be in direct competition with an existing product of C.R. Bard. Enforcement of Conditions. On January 31, 2018, MOFCOM fined Thermo Fisher Scientific for its failure to comply with a condition imposed on its 2014 acquisition of Life Technologies. By decreasing the discounts given to Chinese distributors, the merged entity breached MOFCOM’s conditions that it must reduce the catalogue prices of certain products sold in China by 1% each year and maintain the discounts given to Chinese dealers. MOFCOM issued a relatively low fine of RMB 150,000, in light of the compensation that the merged entity provided to the affected dealers in China and the lack of consumer harm. In other cases, the SAMR and its predecessor MOFCOM lifted the conditions that MOFCOM had imposed in previous transactions. On February 1, 2018, MOFCOM decided to waive the conditions that it imposed on the establishment of a joint venture between Henkel and Tiande Chemical; these conditions included the supply of ethyl cyanoacetate products on fair and reasonable terms and a prohibition on excessive pricing and information exchange between the JV and Henkel.  On February 9, 2018, MOFCOM announced that it would lift the conditions that it imposed in 2013 on the merger between Taiwanese semiconductor companies MediaTek and MStar Semiconductor. The conditions included the maintenance of MStar Taiwan as an independent entity and a prohibition on cooperation between MStar Taiwan and MediaTek without MOFCOM’s prior consent. On August 22, 2018, the SAMR announced that it would lift the conditions imposed on a joint venture involving the Shenhua Group in 2011. The condition required the JV not to limit the supply or raise the prices of its coal-water slurry gasification technology. Enforcement Against Non-Notified Transactions. In 2018, MOFCOM published penalty decisions for failure to notify reportable transactions in a record number of 15 cases.[10] In one case, MOFCOM fined Shandong Sun Holding RMB 300,000 on February 6, 2018, for its failure to notify its acquisition of control in three different target companies. Shandong Sun Holding had initially submitted a filing to MOFCOM in 2015, which was rejected on the basis of incomplete documentation, and submitted another filing in 2016, only after it had completed the acquisitions. On April 26, 2018, the SAMR fined Yunnan Metropolitan Real Estate Development RMB 150,000 for failing to notify its acquisition of stakes in 8 companies, whose aggregate turnover exceeded the thresholds for mandatory notification. In another case, the SAMR fined Dutch paper pulp producer Paper Excellence BV RMB 300,000 on July 30, 2018 for its failure to notify the acquisition of Eldorado Brasil Celulose. The transaction was structured in three steps; the SAMR began its investigation into the transaction in March 2018,  after the parties had carried out the first two steps of the transaction. 3.    Non-Merger Enforcement The SAMR (and its predecessors) initiated 32 investigations involving monopoly agreements and abuse of dominance in 2018.[11] Despite the announcement of the consolidation of the three agencies in March 2018, local Development and Reform Commission (“DRC”) and Administration for Industry and Commerce offices continued to be in operation and conduct enforcement actions. This may change in 2019 as the SAMR issued a notice on December 28, 2018 to authorize provincial AMRs to carry out antitrust enforcement work at the local level.[12] Pharmaceuticals, utilities and transportation were the main industries subject to heightened scrutiny in 2018. Some of the most notable decisions include the NDRC’s decision in January 2018 to impose a total fine of RMB 84.06 million on two Petro China entities for engaging in minimum price-setting in the resale of natural gas;[13] the SAMR’s decision in June 2018 to impose a total fine of RMB 12.86 million on four Shenzhen tugboat companies for price-fixing;[14] and the SAMR’s decision on an investigation initiated in July 2018 to impose a total fine of RMB 12.43 million on two domestic pharmaceutical firms for selling active pharmaceutical ingredients at excessively high prices and for refusal to deal.[15] The fine imposed in each case amounted to 3% to 8% of the undertaking’s relevant annual sales revenue. More significantly, 2018 saw the first published decision since the enactment of the AML where individuals were fined for obstructing an antitrust investigation.[16] On August 22, 2018, the Guangdong DRC fined the legal representative and general manager of a local automobile sales and services company a total of RMB 20,000 for refusing to cooperate with an investigation conducted by the Guangdong DRC. The two executives violated Article 42 of the AML, which provides that individuals under investigation should cooperate with antitrust agencies, by unplugging the USB flash disk from which the officials were retrieving evidence, instructing employees to shut down their computers while the officials were carrying out the investigation, refusing to comply with an order to provide documents (claiming that such documents contained trade secrets) and challenging the authority of the officials. Even though the two executives later apologized and provided the requested documents to the Guangdong DRC, the legal representative was fined RMB 12,000 and the general manager was fined RMB 8,000. While antitrust enforcement agencies focused on the domestic market in 2018 and that there were fewer high-profile investigations involving multinational corporations compared to previous years, the SAMR launched an investigation into three major suppliers of dynamic random access memory and conducted several dawn raids at the offices of these memory chip makers in May 2018.[17] The investigation will likely continue through 2019. 4.    Civil Litigation In 2018, Chinese courts handed down milestone judgments in cases concerning abuse of dominance and resale price maintenance in vertical agreements, which provided more clarity on the interpretation and application of the AML. Abuse of Dominance. Two of the cases involved Tencent, the Chinese tech giant, as the defendant. Tencent’s victory in both cases highlights the difficulty in establishing dominant position in the digital market in China. In the first instance case brought by Shenzhen Micro Source Code Software Development Co., Ltd. (“Micro Source”), a Chinese software company, Micro Source argued that Tencent’s blocking of Micro Source’s WeChat Official Account constituted a refusal to deal and that Tencent engaged in discriminatory practice because other similar official accounts had not been blocked.[18] The WeChat Official Account platform is one of the features offered by WeChat, a Chinese multi-purpose messaging, social media and mobile payment application developed by Tencent. It allows businesses to conduct marketing and promotional activities on WeChat. The Shenzhen Intermediate People’s Court rejected Micro Source’s definition of the relevant market as the mobile instant messaging and social media platform in Mainland China. The court held that the starting point in defining the relevant market in anti-monopoly cases is to identify the goods or services to which the disputed conduct relates, and then carry out a substitutability analysis on those goods or services. While the dispute arose on the WeChat platform, the disputed conduct pointed specifically to the WeChat Official Account services, which the court considered to be a value-added feature separate from WeChat’s basic mobile instant messaging and social media services. As such, the court defined the relevant market as the market for providing marketing and promotional services through the internet in Mainland China. The court further held that the data submitted by Micro Source on WeChat’s average monthly and daily active users did not establish Tencent’s market dominance because first, the data did not relate to the relevant market defined by the court and second, the average number of active users on the platform could not reliably reflect the platform’s market share or power because internet users frequently signed up for multiple competing platforms. Finally, the court found that Micro Source did not adduce any evidence to support its allegation that Tencent engaged in discriminatory practice. In regard to Micro Source’s allegation on refusal to deal, the court noted that a plaintiff must show that the refusal to deal had either the purpose or effect of excluding or restricting competition, an evidential burden that Micro Source failed to discharge. In a separate action, Tencent was sued by Xu Shuqing, an individual, who alleged that WeChat’s refusal to accept a set of emoji created by Xu amounted to abuse of dominance.[19] In dismissing Xu’s appeal, the Supreme People’s Court rejected his definition of the relevant market as the WeChat emoji open platform and his argument that there was no substitution for such platform. Instead, the court defined the relevant market as the internet emoji service market and found that there were other channels for Xu to distribute his set of emoji. While Xu adduced evidence of WeChat’s market share on the WeChat emoji open platform to support his allegation that Tencent held a dominant position, the evidence did not relate to the relevant market defined by the court. The court further cautioned against placing too much emphasis on market share when determining an undertaking’s market position in the highly volatile and dynamic market for internet companies. Finally, the court held that Tencent’s refusal to deal did not have the purpose or effect of excluding or restricting competition because the refusal was justified by Xu’s violation of WeChat’s review policy, which the court determined as reasonable, and that Xu could have revised his design and resubmitted a set of compliant emoji to compete with other applicants. Resale Price Maintenance in Vertical Agreements. While the NDRC (now integrated into the SAMR) utilized an “illegal per se” approach in handling cases involving resale price maintenance, Chinese courts have adopted a more moderate “rule of reason” approach in civil cases, as demonstrated by the Guangdong High People’s Court’s judgment on the Dongguan Gree air conditioner case. Dongguan Yushi Xinqing Geli Trading Co. Ltd. (“Yushi”) and Dongguan Heshi Electronics Co. Ltd. (“Heshi”) are the distributor and supplier of the Gree air conditioners in Dongguan, a city in Guangdong province. The two companies entered into an agreement with Dongguan Hengli Guochang Electronics Store (“Guochang”), a retailer, to sell Gree air conditioners. The agreement contained a clause setting out the minimum resale price of Gree products. In violation of the clause, Guochang sold one of the Gree models below the price agreed between the parties, and Yushi and Heshi demanded Guochang to pay a penalty for the breach. Guochang sued Yushi and Heshi, arguing that the minimum resale price clause amounted to resale price maintenance and constituted a vertical monopoly agreement, which is prohibited by Article 14 of the AML. The Guangdong High People’s Court identified three factors for consideration when analysing resale price maintenance in a vertical agreement: (1) whether competition in the relevant market was sufficient at the material time; (2) the market position of the product in question at the material time; and (3) the purpose and effect of the resale price maintenance policy, including a weighing of pro-competitive and anti-competitive effects. The court confirmed that, unlike cases involving horizontal agreements, plaintiffs in vertical agreement cases bear the burden of establishing the illegality of the resale price maintenance arrangement. Nevertheless, the court also acknowledged that as public interests are at stake in vertical monopoly cases, courts may actively seek and obtain evidence on a case-by-case basis. While finding that the three companies entered into and implemented a resale price maintenance arrangement, the court held that the arrangement did not constitute a monopoly agreement. Even though Gree’s market share amounted to 30% to 40% of the domestic air conditioner market in Mainland China, the court found that Gree did not hold a dominant position and that there was no evidence to show that the purpose or effect of the arrangement was to exclude or restrict competition. In particular, the court acknowledged the potential pro-competitive effects of a resale price maintenance arrangement (for example, maintaining the price of a product at a reasonable level may facilitate market entry for new companies and brands), and held that the relevant market was sufficiently competitive because there was generally low brand loyalty in the relevant market and that undertakings competed on many parameters that were equally, if not more, important than pricing, such as the quality of the product and after-sale service.    [1]   Gibson, Dunn & Crutcher, “Antitrust in China – 2017 Year in Review” (released on March 28, 2018), available at: https://www.gibsondunn.com/antitrust-in-china-2017-year-in-review/.    [2]   Antitrust Source, “Interview with Wu Zhenguo, Director General of China’s State Administration for Market Regulation (SAMR)” (released in December 2018), available at: https://www.americanbar.org/content/dam/aba/publishing/antitrust_source/2018-2019/atsource-december2018/dec18_wu_intrvw_12_17f.pdf.    [3]   Ibid.    [4]   Yicai, “SAMR’s Annual Report Card: It Takes Only 8.5 Days to Form a Company; Approval Rate for New Drugs Accelerated with 48 New Drugs Approved in a Year” (市场监管总局一年成绩单:企业开办需仅8.5天,新药上市加快一年批48个) (released on December 27, 2018), available at: https://www.yicai.com/news/100087903.html.    [5]   See Footnote 2.    [6]   PaRR, “PaRR Analytics: SARM Simple Case Review Averages 15.6 Days in 4Q18” (released on January 18, 2019), available at: https://app.parr-global.com/intelligence/view/prime-2770624.    [7]   SAMR, “SAMR: Increased Efficiency for Review of Business Operator Concentration Cases” (国家市场监管总局:提高经营者集中案件的审查效率) (released on November 16, 2018), available at: http://samr.saic.gov.cn/xw/yw/xwfb/201811/t20181116_277087.html.    [8]   Bloomberg, “Qualcomm Scraps NXP Deal Amid U.S.-China Trade Tensions” (released on July 26, 2018), available at: https://www.bloomberg.com/news/articles/2018-07-26/qualcomm-to-scrap-nxp-deal-as-deadline-passes-for-china-approval.    [9]   See Footnote 1. [10]   SAMR, “Zhang Mao: Protect Fair Competition and Facilitate the Healthy Growth of Socialist Market Economy” (张茅:保护公平竞争 促进社会主义市场经济健康发展) (released on August 1, 2018), available at: http://samr.saic.gov.cn/xw/yw/zj/201808/t20180801_275354.html. [11]   China Market Regulation News, “The Strengthening of Anti-Monopoly Enforcement” (反垄断执法不断增强) (released on January 9, 2019), available at: http://www.cicn.com.cn/2019-01/09/cms114231article.shtml. [12]   SAMR, “Notice from the SAMR on the Delegation of Authority on Anti-Monopoly Enforcement” (市场监管总局关于反垄断执法授权的通知) (released on January 3, 2019), available at: http://samr.saic.gov.cn/xw/yw/wjfb/201901/t20190103_279720.html. The notice sets out the types of cases involving monopoly agreements and abuse of dominance that the SAMR will either handle directly or authorize provincial AMRs to handle: (1) cases involving autonomous regions, municipalities or more than one provinces; (2) cases involving the abuse of administrative power by a provincial government; (3) more complex cases or cases that will have a significant impact on the national level; and (4) other cases that the SAMR deemed necessary to handle directly. Provincial AMRs are authorized to directly handle other cases involving monopoly agreements and abuse of dominance that take place within the relevant administrative area. [13]   SAMR, “SAMR Published Administrative Penalty Decisions Against Two Natural Gas Companies” (市场监管总局发布对两家天然气公司的行政处罚决定书) (released on July 27, 2018), available at: http://samr.saic.gov.cn/gg/201807/t20180727_275281.html. [14]   SAMR, “SAMR Published Administrative Penalty Decisions Against Four Shenzhen Tugboat Companies” (市场监管总局发布对深圳4家拖轮公司的行政处罚决定书) (released on June 25, 2018), available at: http://samr.saic.gov.cn/gg/201806/t20180625_274741.html. [15]   SAMR, “SAMR Imposed a Fine of RMB 12.43 million Against Drug Companies Specializing in Chlorpheniramine Maleate for Monopoly Behavior” (市场监管总局对扑尔敏原料药企业实施垄断行为依法处罚1243万元) (released on January 2, 2019), available at: http://samr.saic.gov.cn/xw/yw/xwfb/201901/t20190102_279577.html. [16]   Guangdong Provincial DRC, “Guangdong Provincial DRC Administrative Penalty Decision No. 7 of 2018” (广东省发展和改革委员会行政处罚决定书 粤发改价监处〔2018〕7号) (released on August 31, 2018), available at: http://www.gddrc.gov.cn/zwgk/zdlyxxgkzl/jgzf/pgpt/201809/t20180903_478125.shtml; “Guangdong Provincial DRC Administrative Penalty Decision No. 8 of 2018” (广东省发展和改革委员会行政处罚决定书 粤发改价监处〔2018〕8号) (released on August 31, 2018), available at: http://www.gddrc.gov.cn/zwgk/zdlyxxgkzl/jgzf/pgpt/201809/t20180903_478124.shtml. [17]   SCMP, “US Memory Chip Maker Micron Says Chinese Officials Visited its Offices ‘Seeking Information’ in Possible New Trade War Front” (released on June 2, 2018), available at: https://www.scmp.com/business/companies/article/2148937/memory-chip-maker-micron-says-chinese-regulatory-authorities. [18]   Legal Weekly, “Court Held that Tencent’s Blocking of Account Did Not Amount to Monopoly” (法院判决腾讯封号不构成垄断) (released on September 19, 2018), available at:  http://www.legalweekly.cn/article_show.jsp?f_article_id=17080. [19]   China Intellectual Property Lawyers Net, “Civil Case Judgment on the Appeal of Tencent Being Sued for Abuse of Market Dominance” (腾讯被诉滥用市场支配地位再审民事裁定书) (released on December 17, 2018), available at: http://www.ciplawyer.cn/html/cpwxfbz/20181217/140845.html?prid=170. The following Gibson Dunn lawyers assisted in the preparation of this client update: Sébastien Evrard, Emily Seo and Bonnie Tong. Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these issues.  Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Antitrust and Competition practice group, or the following lawyers in the firm’s Hong Kong office: Sébastien Evrard (+852 2214 3798, sevrard@gibsondunn.com) Kelly Austin (+852 2214 3788, kaustin@gibsondunn.com) Emily Seo (+852 2214 3725, eseo@gibsondunn.com) Bonnie Tong (+852 2214 3762, btong@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.