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Client Alert

September 24, 2020

COVID 19: German Rules on Possibility to Hold Virtual Shareholders’ Meetings Likely to Be Extended Until End of 2021

Click for PDF With talk about a second Coronavirus wave gathering pace, the German Ministry of Justice and Consumer Protection (Bundesministerium der Justiz und für Verbraucherschutz) is proposing to extend the temporary COVID-19-related legislation of March 2020 significantly simplifying the passing of shareholders’ resolution, including, in particular, the possibility to hold virtual-only shareholders’ meetings. The extension is proposed in unchanged form for another year until the end of 2021. A respective draft regulation has been published at short notice on 18 September 2020 and stakeholders are invited to submit their comments until 25 September 2020. While the legislation of March 2020 was well received in the rise of the COVID-19 crisis the reactions to an extension were mixed so far. Criticism focuses on the significant restrictions of shareholders’ rights by this legislation (e.g. no right to ask questions or to counter-motions in real time, wide discretion of the management with respect to answering submitted questions, only limited appeal right etc.). This was raised not only by shareholders’ activists but also by various parliament members including prominent experts of the ruling coalition. In the reasons of the draft regulation, the ministry strongly emphasizes that companies should only hold virtual-only meetings if actually required in the individual circumstances due to the pandemic. In addition, the ministry encourages the corporations in question to handle the Q&A process as shareholder-friendly as technically possible, including allowing for questions in real- time, if they decide to hold a virtual meeting. The time window to debate the proposal is extremely short. The new shareholders’ meeting season is already approaching quickly, starting as early as in January/February 2021 for companies with business years ending on 30 September 2020. While the Ministry of Justice and Consumer Protection is authorized to extend the period of application of the legislation for another year without any modifications, modifications in substance would require the involvement of parliament and are thus deemed rather unlikely. If the proposal is adopted, it would be up to the corporations themselves to take the ministry's appeal seriously and to make use of the virtual format in a responsible and shareholder-friendly manner. The following Gibson Dunn lawyers have prepared this client update: Ferdinand Fromholzer, Silke Beiter, Johanna Hauser. Gibson Dunn’s lawyers in the two German offices in Munich and Frankfurt are available to assist you in addressing any questions you may have regarding the issues discussed in this update. For further information, please feel free to contact the Gibson Dunn lawyer with whom you usually work, or the three authors: Ferdinand Fromholzer (+49 89 189 33 170, ffromholzer@gibsondunn.com) Silke Beiter (+49 89 189 33 170, sbeiter@gibsondunn.com) Johanna Hauser (+49 89 189 33 170, jhauser@gibsondunn.com) © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
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September 24, 2020

UK Government Announces Its ‘Winter Economy Plan’

Click for PDF Today, the UK Government announced its “Winter Economy Plan” – a series of employment and business support and tax measures intended to support the UK economy as the COVID-19 pandemic continues to impact economic output. These latest support measures mark a shift in focus to keeping the UK economy open whilst providing support to businesses as reduced demand continues to impact many businesses during the winter months and through to Q1 2021. It remains to be seen whether further support measures are announced as the UK grapples both with economic recession and the impact of COVID-19 on public health. The Jobs Support Scheme The UK Government has announced the Jobs Support Scheme (“JSS”) as the successor to the Coronavirus Job Retention Scheme (“CJRS”), starting 1 November 2020 for a period of 6 months. Unlike the CJRS, which was designed to support employees unable to work as a result of the requirement to stay at home, the aim of the JSS is to protect viable jobs by supporting the wages of those in work, providing employers with the option to retain employees on shorter hours rather than making them redundant. Whilst employers participate in the JSS, they are not able to issue redundancy notices to employees on the JSS scheme. To be eligible for the JSS, employees must be working at least 33% of their usual hours and be paid for those hours by their employer as normal. For the remaining hours not worked, the employer and the UK Government will each pay one third of the employee’s wages, resulting in the employee receiving at least 77% of their total wages (the employer paying 55% and the UK Government paying 22%). The level of the grant will be calculated based on an employee’s usual salary, capped at £697.92 per month. The JSS is open to employers with a UK bank account and UK PAYE scheme and is not limited to those employers who made use of the CJRS; all small and medium sized businesses may apply and larger businesses may apply if their turnover has been reduced as a result of the pandemic. Employers may also claim for JSS in addition to claiming the job retention bonus announced earlier in the year. The UK Government has stated that it expects that large employers using the JSS will not be making capital distributions, such as dividend payments or share buybacks, whilst accessing the JSS.  Further guidance on the JSS is expected to be issued in due course and we will update our clients once this has been announced. Self-Employed Support The UK Government has also announced the extension of the Self Employment Income Scheme Grant (“SEISS”). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to the Coronavirus pandemic. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year, capped at £1,875. An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April 2021. UK Government Funding Schemes Bounce Back Loans – the UK Government announced the Pay As You Grow Scheme, which will allow businesses to pay back government Bounce Back Loans over a period of 10 years. This is an extension on the original 6-year term of these loans, together with the UK Government’s 100% guarantee of these loans. In addition, firms in financial difficulty will be permitted to suspend their repayments for up to 6 months and also elect to make interest only payments for the same period, without impacting a firm’s credit rating. The deadline for applications for Bounce Back Loans has also been extended to 31 December 2020. Coronavirus Business Interruption Loan Scheme – the Coronavirus Business Interruption Loan Scheme will also be extended to 31 December 2020 for applications and the UK Government has announced its intention to provide lenders with the ability to extend the term of a loan from 6 years to 10 years. This also has the effect of extending the UK Government’s 80% guarantee of these loans. Coronavirus Large Business Interruption Loan Scheme - the deadline for applications for Coronavirus Large Business Interruption Loans has been extended to 31 December 2020. Future Fund - the deadline for applications for funding under the Future Fund scheme has been extended to 31 December 2020. Tax Measures The temporary cut in VAT from 20% to 5% for the tourism and hospitality sectors that was due to expire in January 2021 has been extended through to 31 March 2021. In addition, businesses that deferred their VAT payments due in March to June 2020 will be given the option to pay their VAT in smaller instalments. Instead of paying a lump sum in full at the end March 2021, these businesses will be able to make 11 equal instalments over 2021-2022.  It has been announced that businesses will need to opt into this VAT deferral mechanism and that HM Revenue & Customs will put in place an opt-in process in “early 2021”. A further tax deferral has been introduced for self-assessment income tax payers (building on the deferral provided in July 2020): details are still be provided at the time of writing, but it has been announced that taxpayers with up to £30,000 of self-assessment income tax liabilities will be able to use the “Time to Pay” facility to secure a further 12 months to pay those liabilities due in January 2021, meaning that payments may now not need to be made until January 2022. This client update was prepared by James Cox, Sandy Bhogal, Benjamin Fryer, Amar Madhani, and Georgia Derbyshire. Gibson Dunn’s lawyers are available to assist with any questions you may have regarding developments related to the COVID-19 outbreak.  For additional information, please contact your usual contacts or any member of the Firm’s Coronavirus (COVID-19) Response Team. In the UK, the contact details of the authors and other key practice group lawyers are as follows: James A. Cox – London, Employment (+44 (0)20 7071 4250, jcox@gibsondunn.com) Sandy Bhogal  – London, Tax (+44 (0)20 7071 4266, sbhogal@gibsondunn.com) Benjamin Fryer – London, Tax (+44 (0)20 7071 4232, bfryer@gibsondunn.com) Amar Madhani – London, Private Equity and Real Estate (+44 (0)20 7071 4229, amadhani@gibsondunn.com) Georgia Derbyshire – London, Employment (+44 (0)20 7071 4013, GDerbyshire@gibsondunn.com) © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
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September 22, 2020

Developments in the U.S. Banking Regulators’ Treatment of Confidential Supervisory Information

Click for PDF One of the thornier areas of law for U.S.-regulated banks and their holding companies is that regarding confidential supervisory information (CSI). U.S. regulators treat bank examination reports and related correspondence and materials, which are often the most useful sources of information about a financial institution, as the regulators’ own property, with parties subject to severe penalties for disclosing such information without prior regulatory approval.[1] Receiving approval is often a time-consuming process that may frustrate corporate transaction and litigation deadlines. In addition, each of the federal regulators – the Board of Governors of the Federal Reserve System (Federal Reserve), the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Consumer Financial Protection Bureau (CFPB) – and each state financial regulatory authority – such as the New York Department of Financial Services (NYDFS) – has its own rules on the subject. There have been two recent meaningful developments in the law regarding CSI. First, the Federal Reserve recently finalized revisions to its CSI regulation (Fed Final Rule); those revisions become effective on October 15th. Second, on September 9th, the NYDFS reproposed a regulation (NYDFS Proposed Rule) that would liberalize its approach to CSI disclosure. This Client Alert discusses these two developments. In addition, the Alert contains a summary of the principal provisions of the CSI regulations of the four federal banking regulators and NYDFS, on the assumption that the NYDFS regulation is finalized in the form that NYDFS proposed it. I. Federal Reserve Final Rule The Fed Final Rule is an improvement, albeit a modest one, in terms of providing Federal Reserve-supervised institutions – bank and thrift holding companies, including their nonbank subsidiaries, state member banks, and branches, agencies and representative offices of non-U.S. banks – flexibility in sharing CSI without the Federal Reserve’s prior approval. Enhancements to the Federal Reserve’ regulatory framework demonstrate an effort to streamline the approval process in certain areas. A. Scope of CSI The Fed Final Rule defines CSI as “information that is or was created or obtained in furtherance of the [Federal Reserve’s] supervisory, investigatory or enforcement activities,” and includes reports of examination, inspection and visitation; confidential operating and condition reports; supervisory assessments; investigative requests for documents or other information; and supervisory correspondence or other supervisory communications, as well as “any information derived from or related to such information.”[2] In a clarification, the Fed Final Rule states that CSI does not include documents that are prepared “for or by” a supervised financial institution for its own business purposes that are in its own possession and do not otherwise contain CSI, even though copies of such documents in the Federal Reserve’s possession do constitute CSI.[3] Therefore, turning over such non-CSI to the Federal Reserve does not make the information CSI in the hands of the supervised financial institution. B. Disclosure to Affiliates The Fed Final Rule states that a supervised institution may disclose CSI without prior Federal Reserve approval not only to its own directors, officers and employees, but also, when it is “necessary or appropriate for business purposes,” to directors, officers, employees of its affiliates.[4] This position liberalizes the regulation from prior practice and aligns the Federal Reserve’s position more closely with that of the CFPB, under which CSI may be disclosed to [directors, officers and employees of] affiliates to the extent that it “is relevant to the performance of such individuals’ assigned duties.”[5] As shown in the Appendix, neither the OCC nor the FDIC has adopted this position in their CSI rules; disclosure to a parent may be permitted without prior regulatory approval, but not to other affiliates.[6] C. Disclosure to Legal Counsel, Auditors, and Service Providers The Fed Final Rule also makes a change from the prior regulation in permitting supervised institutions to disclose CSI to external legal counsel and their auditors, without prior written approval, when “necessary or appropriate in connection with the provision of legal or auditing services to the supervised financial institution.”[7] This change aligns the Federal Reserve’s position with that of the OCC and the even more permissive CFPB; the FDIC, however, has not adopted this position with respect to external legal counsel, and therefore the default provision of specific prior approval obtains under its regulations.[8] In addition, under the revised Federal Reserve framework, supervised institutions are also able to disclose CSI to service providers to the institution and service providers to the institution’s external counsel and auditors (such as consultants, contractors, and technology providers), without prior written approval, in instances where such disclosure is “necessary to the service provider’s provision of services.”[9] The Fed Final Rule requires that the service provider first enter into a written agreement with the supervised institution, external counsel or auditor in which the service provider agrees that (i) it will treat the CSI in accordance with applicable regulations and (ii) it will not use the CSI for any purpose other than as provided under its contract to provide services to the supervised institution.[10] The rule requires supervised institutions to maintain a written account of such service provider disclosures and provide the Federal Reserve a copy of the written account on request.[11] The Fed Final Rule also liberalizes the manner of disclosure. Under prior practice, disclosure of CSI to external auditors and counsel was required to be limited to on-premises review; the Federal Reserve did not permit the information to be copied or shared off-site. The Fed Final Rule strikes this outdated requirement and allows for disclosure in any manner when “necessary or appropriate in connection with the provision of legal or auditing services to the supervised financial institution.”[12] D. Disclosure to Other Regulators The Fed Final Rule also somewhat modifies the manner in which CSI requests for disclosure to other regulators are handled. Historically, any disclosure by a supervised institution of Federal Reserve CSI to another regulatory body (e.g., other banking regulators, state and federal, or the Securities and Exchange Commission) required the prior written consent of the Federal Reserve’s General Counsel. With respect to CSI about a supervised institution “that is contained in documents prepared by or for the institution for its own business purposes,” such as internal minutes, the Fed Final Rule changes this practice and permits institutions to make requests to share such CSI with other bank regulators to the “central point of contact at the Reserve Bank, equivalent supervisory team leader, or other designated Reserve Bank employee.”[13] Disclosure will be permitted upon a determination by the Federal Reserve point of contact that [the other regulator] “has a legitimate supervisory or regulatory interest in the [requested internally prepared CSI].”[14] Disclosure of all other CSI to another regulator, however, still requires the consent of the Federal Reserve’s General Counsel.[15] II. NYDFS Proposed Rule  Like the Fed Final Rule, the NYDFS Proposed Rule, which is a re-proposal of a November 2019 proposal, is a welcome development because it demonstrates a greater willingness to harmonize the NYDFS CSI regime with those of other regulators. If finalized, New York would, for the first time, have a CSI regulation in addition to a statutory provision, Section 36.10 of the Banking Law. A. Scope of CSI The NYDFS Proposed Rule defines CSI as “any information that is covered by Section 36.10 of the [New York] Banking Law.”[16] Section 36.10, in turn, refers to “reports of examinations and investigations [of any NYDFS-supervised institution and affiliates], correspondence and memoranda concerning or arising out of such examination and investigations, including any duly authenticated copy or copies thereof,” and includes any confidential materials shared by NYDFS with any governmental agency or unit.[17] B. Disclosure to Affiliates Under Section 36.10, the default standard for disclosure of any CSI is the prior written approval of NYDFS. The NYDFS Proposed Rule contains an exception for disclosure of CSI to affiliates and their directors, officers and employees when “necessary and appropriate for business purposes.”[18] We note that this standard is different from the Federal Reserve and OCC standard, which is “necessary or appropriate” for business purposes.[19] C. Disclosure to Legal Counsel, Auditors and Other Service Providers  The NYDFS Proposed Rule would also ease current restrictions on NYDFS-supervised institutions’ disclosure of CSI to certain advisors. It would provide a “limited exception” for disclosure to “legal counsel or an independent auditor that has been retained or engaged by such [supervised institution] pursuant to an engagement letter or written agreement.”[20] The applicable engagement letter or written agreement would be required to contain certain acknowledgements by the legal counsel or independent auditor; inter alia, it would be required to state (i) that the information will be used solely to provide “legal representation or auditing services” and (ii) that the information will be disclosed solely to employees, directors, or officers only “to the extent necessary and appropriate for business purposes.[21] Notably, unlike the Fed Final Rule, the NYDFS Proposed Rule does not contain an exception for third-party vendors to legal counsel and external auditors. In declining to permit what it characterized as “a broad exception,” NYDFS noted that the OCC’s regulations do not contain one.[22] D. Disclosure to Other Regulators With respect to the disclosure of NYDFS CSI to other regulators, including, for non-U.S banks, their home country supervisors, the NYDFS Proposed Rule would require the prior written consent of both the Senior Deputy Superintendent of NYDFS for Banking and the General Counsel of NYDFS, or their respective delegates, prior to disclosure.[23] There is no streamlined procedure, as in the Fed Final Rule, for internally generated CSI. E. Duty to Notify NYDFS of Requests for CSI The NYDFS Proposed Rule requires each supervised institution, affiliate of a supervised institution, legal counsel, and independent auditor that is served with a request, subpoena or order to provide CSI to notify the Office of the General Counsel of the request immediately so that NYDFS will be able to intervene in the action as appropriate.[24] But it does not – in a relaxation from NYDFS’s November 2019 position – require external counsel and independent auditors to agree contractually to assert legal privileges and protections as requested by NYDFS on the agency’s behalf.[25] The proposal instead would mandate that CSI holders only inform the requester and the relevant tribunal of the obligations set forth in the NYDFS Proposed Rule and the substance of Section 36.10 of the New York Banking Law.[26] Relatedly, the NYDFS Proposed Rule does not require that supervised institutions maintain a record of all disclosed CSI.[27] Conclusion The Fed Final Rule and the NYDFS Proposed Rule signal a growing awareness by regulators of the inefficiencies posed by the current CSI regulatory framework. One hopes that the Fed Final Rule will help establish a regulatory benchmark for the other federal banking regulators, and that NYDFS’s willingness to reexamine its own processes will perhaps inspire other state regulators to revisit their regulations. Nonetheless, the overriding traditional principle of CSI law and regulation – that the regulators consider CSI their property, to be disclosed only upon their specific consent – remains a key feature of all regulatory regimes. Appendix: Comparison of CSI Requirements Topic Federal Reserve OCC FDIC CFPB NYDFS Proposed Rule Supervisory Jurisdiction Bank/thrift holding companies and their nonbank subsidiaries, financial holding companies, state member banks, branches, agencies and representative offices of non-U.S. banks, and systemically significant nonbank financial companies when designated. National banks, federally chartered savings associations, and federally licensed branches and agencies of non-U.S. banks. FDIC-insured state banks that are not members of the Federal Reserve System and FDIC-insured state savings associations. Depository institutions with more than $10 billion in assets and certain nonbank financial entities, including mortgage-related firms, lenders (e.g., student loans, payday), certain other large nonbank consumer financial entities (e.g., debt collection/relief and consumer finance firms, credit reporting agencies), and prepaid and credit card issuers. Any entity licensed, chartered, authorized, registered, or otherwise subject to supervision by NYDFS under the New York Banking Law. Scope Information that is or was created or obtained in furtherance of the Board’s supervisory, investigatory, or enforcement activities.[28] Includes any portion of a document in the possession of any person, entity, agency or authority, including a supervised institution, that contains or would reveal confidential supervisory information is CSI. New 12 C.F.R. § 261.2(b)(1). Excludes internally prepared documents for business purposes that do not contain CSI (even if such information is in possession by the Board and such copies constitute CSI. New 12 C.F.R. § 261.2(b)(2). (a)  Records created or obtained by the OCC in connection with its supervisory responsibilities; (b)  Records compiled by the OCC in connection with its enforcement responsibilities; (c)  Examination reports, supervisory correspondence, investigatory files complied, agency memoranda; (d)  CSI obtained by a third party; (e)  Testimonies and interviews with current or former agency employees, officers, or agents concerning information acquired in course of such person’s official duties or status; and (f)  Information related to current and former supervised institutions and their subsidiaries and affiliates. 12 C.F.R. § 4.37(b)(1). (a)  Records designated pursuant to an executive order; (b)  Records relating solely to internal personnel rules and practices; (c)  Records otherwise exempt from disclosure by statute; (d)  Intra-agency memoranda or letters; (e)  Certain records compiled for law enforcement purposes; and (f)  Records related to examination, operation, or condition of the supervised institution, prepared by or on behalf of the FDIC or other regulatory body. 12 C.F.R. § 309.5(g). (a)  Reports of examination, inspection and visitation, non-public operating, condition, and compliance reports, and any information contained in, derived from, or related to such reports; (b)  Any document, including reports of examination, prepared by, on behalf of, or for the use of the CFPB or any other federal, state or foreign regulator supervising such financial institution, and any information derived from such documents; (c)  Intra-agency communications; and (d)  Information provided to the CFPB by the supervised institution regarding consumer risk in the offering or provision of consumer financial products or services, or to assess whether such supervised institution is a “covered person.” 12 C.F.R. § 1070.2(b)(1). All reports of examinations and investigations, correspondence and memoranda concerning or arising out of such examination and investigations, including any duly authenticated copy or copies thereof in the possession of any supervised institution or its affiliates, including any confidential materials shared by NYDFS with any governmental agency or unit. NY Banking Law § 36.10. Default Disclosure Standard “[P]rior written permission of the General Counsel” New § 261.20(a). Supervised institution must demonstrate “a substantial need to . . . disclose such information that outweighs the need to maintain confidentiality.” New 12 C.F.R. § 261.23(a)(1). Prior written consent. 12 C.F.R. § 4.37(b)(1). Prior written consent. 12 C.F.R. § 309.6(b). Default Standard: “[G]ood cause for disclosure.” 12 C.F.R. § 309.6(b). Prior written consent. 12 C.F.R. §1070.2(b)(2)(ii). Prior written consent. NY Banking Law § 36.10. Default Standard: “[T]he ends of justice and the public advantage will be subserved by the publication thereof.” NY Banking Law § 36.10. Certain Exceptions to Disclosure Parent Holding Company No consent or written request required, when “necessary or appropriate for business purposes.” New 12 C.F.R. § 261.21(b)(1). No consent or written request required, when “necessary or appropriate for business purposes.” 12 C.F.R. § 4.37(b)(2). For majority shareholders, supervised institution’s board must authorizes disclosure via board action. 12 C.F.R. § 309.6(b)(7)(iii). No consent or written request required for parent holding company personnel, to the extent that it “is relevant to the performance of such individuals' assigned duties.” 12 C.F.R. § 1070.42(b)(1). No consent or written request required, when “necessary and appropriate for business purposes.” 3 NYCRR § 7.2(c) (proposed 2020). Affiliates No consent or written request required, when “necessary or appropriate for business purposes.” New § 261.21(b)(1). Non-parent holding company affiliates require prior written consent   12 C.F.R. § 4.37(b)(2). Non-parent holding company affiliates require prior written consent. 12 C.F.R. § 309.6(b)(7)(iii). No consent or written request required for affiliate personnel, to the extent that it “is relevant to the performance of such individuals' assigned duties.” 12 C.F.R. § 1070.42(b)(1). No consent or written request required, when “necessary and appropriate for business purposes.” 3 NYCRR § 7.2(c) (proposed 2020). Outside Counsel / Auditors No consent or written request required, when “necessary or appropriate in connection with the provision of legal or auditing services.” New 12 C.F.R. § 261.21(b)(3). No consent or written request required, when “necessary or appropriate for business purposes.” 12 C.F.R. § 4.37(b)(2). For outside counsel, prior written consent required, and a showing of “good cause.”     12 C.F.R. § 309.6(b)(7)(i) and (iv). For external auditors, no consent or written request required. See FDIC Financial Institutions Letter (FIL-57-92), dated July 24, 1992. No consent or written request required. 12 C.F.R. § 1070.42(b)(2)(i). No consent or written request required for disclosure “to legal counsel or an independent auditor [if]. . . retained or engaged by such regulated entity pursuant to an engagement letter or written agreement” where the legal counsel or independent auditor states, among other things, that CSI will be used solely to provide “legal representation or auditing services”; and that the information will be disclosed solely to employees, directors, or officers only “to the extent necessary and appropriate for business purposes.” 3 NYCRR § 7.2(b) (proposed 2020). Other Service Providers: CSI may be shared with service providers of attorneys or auditors if the service provider is under a written agreement with the legal counsel or auditor pursuant to which it agrees to treat the CSI in accordance with 12 C.F.R. § 261.20(a) and use CSI only “as necessary to provide the services..” New 12 C.F.R. § 261.21(b)(3). Other Service Providers to Institution: Allowed when “necessary to the service provider’s provision of services” and such provider is bound by written agreement with the supervised institution, agreeing to treat CSI in accordance with 12 C.F.R. § 261.20(a) and use CSI only “as provided under its contract to provide services.” New 12 C.F.R. § 261.21(b)(4). CSI may be provided by the supervised institution to a consultant if the consultant enters into a written contract, agreeing to abide by OCC rules and use CSI only to provide services. 12 C.F.R. § 4.37(b)(2). Prior written consent, and a showing of “good cause.” 12 C.F.R. § 309.6(b)(7)(i) and (iv). No consent or written request required for disclosure to a contractor, consultant, or service provider. 12 C.F.R. § 1070.42(b)(2)(i). Other persons require prior written consent. 12 C.F.R. § 1070.42(b)(2)(ii). Prior written consent required. NY Banking Law § 36.10. Other regulators Consent of “central point of contact at the Reserve Bank, equivalent supervisory team leader, or other designated Reserve Bank employee” to disclose internally prepared material containing CSI to the FDIC, OCC, CFPB, state regulators supervising such institution; prior written consent required to disclose all other CSI. New 12 C.F.R. § 261.21(b)(2). Prior written consent required. 12 C.F.R. § 4.37(b)(1). Prior written consent required, and a showing of “good cause.” 12 C.F.R. § 309.6(b)(7)(i) and (iv). Prior written consent required. 12 C.F.R. § 170.42(b)(2)(ii). Prior written consent of the Senior Deputy Superintendent of NYDFS for Banking and the General Counsel required. 3 NYCRR § 7.2(f) (proposed 2020). ____________________    [1]   Federal bank examination reports, for example, cite 18 U.S.C. § 641, which makes it a felony to convert, knowingly, government property to one’s own use. Lesser sanctions for alleged CSI violations have included substantial fines and prohibitions on consulting arrangements with supervised institutions for a period of years.    [2]   New 12 C.F.R. § 261.2(b)(1).    [3]   See id. § 261.2(b)(2)(1).    [4]   See id. § 261.21(b)(1).    [5] 12 C.F.R. § 1070.42(b)(1).    [6]   See Appendix.    [7]   New 12 § 261.21(b)(3).    [8]   See Appendix. The FDIC does not require prior approval for a bank’s independent auditor.    [9] New 12 § 261.21(b)(3)-(4). [10] Id. [11]   Id. § 261.21(b)(4). [12]   Id. § 261.21(b)(3). [13]   Id. § 261.21(b)(2). [14]   Id. [15]   Id. § 261.23(b)-(c). [16]   3 N.Y.C.R.R. § 7.1(a) (proposed 2020). [17]   New York Banking Law, Section 36.10. [18]   3 N.Y.C.R.R. § 7.2(c) (proposed 2020). [19]   See Appendix. [20]   3 N.Y.C.R.R. § 7.2(b) (proposed 2020). [21] Id. (emphasis added). [22]   NYS Register, page 12 (Sept. 9, 2020), available at https://www.dos.ny.gov/info/register/2020/090920.pdf. [23]   3 N.Y.C.R.R. § 7.2(f) (proposed 2020). [24]   Id. § 7.2(d) (proposed 2020). [25]   See 3 N.Y.C.R.R. § 7.2(c) (proposed 2019) (institution “agrees to notify the Department, promptly and in writing, of any demand or request for the supervisory confidential information, and agrees to assert on behalf of the Department all such legal privileges and protections as the Department may request”). [26]   3 N.Y.C.R.R. § 7.2(d) (proposed 2020). [27]   This too is a change from the 2019 position. See 3 N.Y.C.R.R. § 7.2(f) (proposed 2019) (“Regulated entities must keep a written record of all confidential supervisory information disclosed pursuant to the provisions of this Part and a copy of each party’s written agreement mentioned in subdivision (b) of this section for inspection and review by the Department”). [28]   Includes “reports of examination, inspection, and visitation; confidential operating and condition reports; supervisory assessments; investigative requests for documents or other information; and supervisory correspondence or other supervisory communications.” New 12 C.F.R. § 261.2(b)(1).         Excludes “[d]ocuments prepared by or for a supervised financial institution for its own business purposes that are in its own possession and that do not include confidential supervisory information as defined in paragraph (b)(1) of this section, even though copies of such documents in the Board’s or Reserve Bank’s possession constitute confidential supervisory information.” Id. The following Gibson Dunn lawyers assisted in preparing this client update: Arthur Long, James Springer and Samantha Ostrom. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work in the firm’s Financial Institutions practice group, or the following: Financial Institutions Group: Arthur S. Long – New York (+1 212-351-2426, along@gibsondunn.com) Matthew L. Biben – New York (+1 212-351-6300, mbiben@gibsondunn.com) Michael D. Bopp – Washington, D.C. (+1 202-955-8256, mbopp@gibsondunn.com) Stephanie Brooker – Washington, D.C. (+1 202-887-3502, sbrooker@gibsondunn.com) M. Kendall Day – Washington, D.C. (+1 202-955-8220, kday@gibsondunn.com) Mylan L. Denerstein (+1 212-351- 3850, mdenerstein@gibsondunn.com) Jeffrey L. Steiner – Washington, D.C. (+1 202-887-3632, jsteiner@gibsondunn.com) James O. Springer – New York (+1 202-887-3516, jspringer@gibsondunn.com) Samantha J. Ostrom – Washington, D.C. (+1 202-955-8249, sostrom@gibsondunn.com) © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
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September 21, 2020

Temporary German COVID-19 Insolvency Regime Extended in Modified Form

Click for PDF When the COVID 19 pandemic first hit European shores in early spring 2020, the German legislator was quick to introduce wide-reaching legislative reforms to protect the German business world from unwanted consequences of an economy struggling with unprecedented upheaval, the lock-down and the ensuing social strain.[1] One key element of the overall legal reform in March 2020 was the temporary derogation from the regular mandatory German-law requirement to file for insolvency immediately whenever a company is either illiquid (Zahlungsunfähigkeit) or over-indebted (Überschuldung). This derogation has now been extended in time for over-indebted companies, but restricted in scope for illiquid companies. I.  The Temporary Insolvency Law Reform in March 2020 At the time the German Act on the Temporary Suspension of the Insolvency Filing Obligation and Liability Limitation of Corporate Body in cases of Insolvency caused by the COVID-19 Pandemic (“Gesetz zur vorübergehenden Aussetzung der Insolvenzantragspflicht und zur Begrenzung der Organhaftung bei einer durch die COVID-19-Pandemie bedingten Insolvenz” - COVInsAG)[2] was introduced in March 2020, it was felt that the strict insolvency filing requirement that obliges management to file for insolvency without undue delay, but in any event no later than three weeks after such insolvency reason first occurs, would (i) place undue time pressures on companies to file for insolvency in situations where this short time period did not even allow management to canvass its financial or restructuring options or access to newly introduced state funding or other financing sources, (ii) result in a wave of insolvencies of otherwise healthy entities based purely on the traumatic impact of the pandemic and (iii) result in unwanted distortions of the market by failing to differentiate appropriately between businesses facing merely temporary cash-flow problems and genuinely moribund companies with long-standing challenges or issues. In a nutshell and without going into all details, the interim reform of the German Insolvency Code (Insolvenzordnung, InsO) via the COVInsAG introduced a temporary suspension of the mandatory insolvency filing requirement until September 30, 2020 for both the insolvency reasons of illiquidity (Zahlungsunfähigkeit) and of over-indebtedness (Überschuldung) by way of a strong legal assumption that any such insolvency was caused by the pandemic if (i) the company in question was not yet illiquid on December 31, 2019 and (ii) could show that it would (still or again) be in a position to pay all of its liabilities when due on and after September 30, 2020. This temporary exemption from having to file for insolvency was flanked by a number of other legislative tweaks to the Insolvency Code that privileged and protected a company’s continued trading during such time window against management liability risks and/or later contestation rights of the insolvency administrator in case the temporary crisis in the spring and summer of 2020 would ultimately result in a later insolvency, after all. Access to new financing was similarly privileged in this time window when the company could show that it traded under the protection of the COVID 19 exemption from the regular insolvency filing requirement. Finally, the COVInsAG also contained a clause that allowed an extension of this protective time window beyond September 30, 2020 up to the maximum point of March 31, 2021 by way of separate legislative act. II.  The Modified Extension Adopted on September 17, 2020 While an extension of the temporary suspension of the filing requirement was consistently deemed likely by insolvency experts and in political cycles, Germany has since moved beyond the initial lock-down and has mostly opened up the country for trading again. It has also become apparent that, in particular, a continued blanket derogation from the mandatory filing requirement for companies facing severe cash-flow problems to the point of illiquidity (i) would often only delay the inevitable and (ii) create an unwanted cluster of many insolvency proceedings which are ultimately all filed for at the same time when the suspension comes to an end, rather than a steady and progressive cleansing of the market by gradually removing companies that have failed to recover from the pandemic in a reasonably short period of time. As a consequence, Germany has chosen not simply to extend the current provisions in unchanged form, but rather has significantly modified the wording of the COVInsAG to address the above concerns. Over-Indebtedness In particular, as of October 1, 2020 and until December 31, 2020, a continued derogation from the immediate obligation to file for insolvency henceforth only applies to companies which otherwise would only file for insolvency due to over-indebtedness (Überschuldung) but which are not also illiquid. Such companies remain protected from having to file for insolvency based on the above-described rules until December 31, 2020, if (i) they were not already illiquid by December 31, 2019 and will not be illiquid after September 30, 2020 and thereafter. Unlike illiquid companies, it was felt that companies which are over-indebted, i.e. (i) whose assets based on specific insolvency-driven valuation rules are not sufficient to cover their liabilities and (ii) which do not currently have a positive continuation prognosis (positive Fortführungsprognose), deserve a further grace period during which they may address their underlying structural issues, provided they do not enter illiquidity during this time window. This extension until year end for over-indebted companies also addresses the often-voiced concerns that the uncertain future effects of the pandemic on a company’s medium-term prospects currently do not allow for a meaningful continuation prognosis which by general consensus has to cover the liquidity situation over the next 12 to 24 months. Illiquidity This new restriction of the interim derogation from the filing requirement to over-indebtedness only, in turn, means that companies that cannot pay their liabilities when they fall due on September 30, 2020 (and beyond) and, therefore, are illiquid under German insolvency law terms, may no longer justify such financial distress by claiming it is caused by the pandemic. Instead, they will now be obliged to file for insolvency based on illiquidity once the initial protection accorded to them by the March 2020 rules runs out at the end of September 30, 2020. With it being mid-September 2020 already, this will give the management of any entity facing serious current cash-flow problems only another two weeks to either remedy such cash flow problems and restore full solvency or file for insolvency on or shortly after October 1, 2020 due to their illiquidity at that point in time. Consequential Issues The new, changed wording of the COVInsAG consequently restricts the other privileges connected with the temporary exemption from the filing requirement, i.e. that companies are permitted to keep trading during the extended time-window with certain protections against subsequent insolvency contestation rights, personal liability derogations or privileges and simplified access to new external or internal restructuring financing or loans, only to over-indebted companies. For them, these additional rules, which they may have already become accustomed to in the period between March 2020 and September 30, 2020, are simply extended until December 31, 2020. III.  Immediate Outlook This law reform is of utmost importance for the management and the shareholders of any German entities that are currently in significant financial distress. The ongoing, periodic monitoring of their own financial position will need to determine in an extremely short time-frame whether or not the respective company is either illiquid or over-indebted as of September 30, 2020. If necessary such analysis should be firmed up by involving external advice or restructuring experts. If the company is found to be over-indebted but not illiquid, the focus of any future turn-around must be December 31, 2020, i.e. the continued applicability of the COVInsAG rules may continue to provide some respite until then. If the company is found to be illiquid, the remaining time until September 30, 2020 must be used productively to either restore future liquidity via external or internal funding in the shortness of the available time or the filing for insolvency in early October 2020 becomes inevitable and should be prepared. Managing directors of illiquid companies that do not file for insolvency without undue delay, but continue trading regardless of the insolvency reason, will again face the twin risks of personal civil and criminal liability based on a delayed or omitted filing. They and their trading partners and creditors, furthermore, face the full power of the far-reaching array of insolvency contestation rights (Insolvenzanfechtungsrechte) for a subsequent insolvency administrator of any measures now taken outside of the protective force of the COVInsAG interim rules. _________________________________   [1]  In this context, see our earlier general COVID 19 alerts under: https://www.gibsondunn.com/whatever-it-takes-german-parliament-passes-far-reaching-legal-measures-in-response-to-the-covid-19-pandemic/ as well as under: https://www.gibsondunn.com/european-and-german-programs-counteracting-liquidity-shortfalls-and-relaxations-in-german-insolvency-law/.   [2]  In this context, again see: https://www.gibsondunn.com/whatever-it-takes-german-parliament-passes-far-reaching-legal-measures-in-response-to-the-covid-19-pandemic/, under section II.2, as well as with further analysis in this regard https://www.gibsondunn.com/european-and-german-programs-counteracting-liquidity-shortfalls-and-relaxations-in-german-insolvency-law/. __________________________________ The following Gibson Dunn lawyers have prepared this client update: Lutz Englisch, Birgit Friedl, Marcus Geiss. Gibson Dunn’s lawyers in the two German offices in Munich and Frankfurt are available to assist you in addressing any questions you may have regarding the issues discussed in this update. For further information, please feel free to contact the Gibson Dunn lawyer with whom you usually work, or the three authors: Lutz Englisch (+49 89 189 33 150, lenglisch@gibsondunn.com) Birgit Friedl (+49 89 189 33 122, bfriedl@gibsondunn.com) Marcus Geiss (+49 89 189 33 115, mgeiss@gibsondunn.com) © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
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September 21, 2020

Antitrust Merger Enforcement Update: DOJ Antitrust Releases New Guidelines for Merger Remedies

Click for PDF U.S. and EU Enforcers to Renew Focus on “Below the Radar” Transactions On September 3, 2020, the Antitrust Division of the U.S. Department of Justice (the “Division”) released a new Merger Remedies Manual (the “Manual”). The Division traditionally reviews mergers involving airlines, health insurance, finance, publishing, media, beer, telecommunications, and other industries. In 2018, Assistant Attorney General Makan Delrahim formally withdrew the 2011 Policy Guide to Merger Remedies (“2011 Guide”), relying instead on the Policy Guide to Merger Remedies published in 2004 (“2004 Guide”), while the Division reconsidered its remedy policies.[1] This new Manual is the culmination of that process. The Manual, which only governs DOJ procedures and not those of the Federal Trade Commission,[2] expresses a strong preference for structural relief—including for vertical transactions (i.e., transactions involving parties that operate at different levels of a supply chain, such as a merger between a manufacturer and a distributor). The Manual also addresses new topics such as structuring remedies in the context of consummated mergers and coordination with global enforcers and regulatory agencies. Lastly, the Manual describes certain provisions the Division will require in consent decrees to ensure effective enforcement. In addition, FTC Chairman Simons and European Commissioner Vestager recently made comments signaling increased scrutiny of deals that do not meet the HSR or EU thresholds. These comments indicate that both the FTC and the EC will be more aggressive in using their existing authority to investigate smaller acquisitions that might involve future competitors. New DOJ Merger Remedy Manual Issued The Division’s new Manual includes a number of important revisions, although some reflect existing practice as opposed to new policy. Strong Preference for Structural Relief for Horizontal and Vertical Concerns. Signaling a clear break from the DOJ’s 2011 Guide[3] and the FTC’s merger remedies policy,[4] which allow for non-structural “conduct” or “behavioral” remedies in vertical merger cases, the Manual expresses a “strong[] prefer[ence]” for structural remedies in both horizontal and vertical merger cases: “[a]lmost all merger remedies are structural,” and that conduct remedies are only appropriate in “limited circumstances.”[5] The Manual acknowledges that short-term conduct remedies may be needed to facilitate structural relief,[6] but states that a stand-alone conduct remedy is only appropriate where: “(1) the transaction generates significant efficiencies that cannot be achieved without the merger; (2) a structural remedy is not possible; (3) the conduct remedy will completely cure the anticompetitive harm; and (4) the remedy can be enforced effectively.”[7] Characteristics of Potentially Ineffective Divestitures. The Manual outlines characteristics of divestitures that may be ineffective in preserving competition, including where the divestiture is of less than an existing standalone business; where it combines previously independent capital; where the merged firm retains rights to critical intangible assets; where ongoing entanglements remain between the firms; and where there are substantial regulatory or logistical hurdles.[8] However, while the 2004 Guide “strongly disfavored” so-called “crown jewel provisions” that require certain valuable assets be included in the divestiture package if the parties are unable to sell the initially agreed-upon assets within a certain time.[9] The new Manual does not comment on such provisions. The FTC merger remedies policy, in contrast, expressly allows for the use of “crown jewel” provisions and the FTC has a record of approving such provisions.[10] Under existing policy, the Division will appoint a “divestiture trustee” in the event the parties are unable to find a buyer and sell the divested assets by the agreed-upon deadline, which is in most cases 90 days after the entry of a hold separate order. With this change in the Division’s policy, Division might be more willing to consider crown jewel provisions as an alternative to divestiture trustees. While a crown jewel might place additional risk on the merging parties because it requires them to sell valuable assets, in some cases a crown jewel enables the Division to accept a divestiture remedy that it would otherwise be unwilling to agree to—giving merging parties another option for settling merger cases without litigation. Crown jewel provisions might be an attractive alternative resolution for the Division and the merging parties in cases where there is heightened risk that the parties will be unable to find an acceptable buyer for the divested assets within an acceptable timeframe. Private Equity Firms as Divestiture Buyers. The Division has as long-standing preference for identifying an upfront divestiture buyer, and the Manual notes that “identification of an upfront buyer is particularly important in cases where the Division determines that there are likely to be few acceptable and interested buyers.”[11] In the past, however, the Division has not indicated a preference for any particular type of otherwise qualified buyer for the to-be-divested assets. In a departure from this practice, the Division’s Manual remarks that, in some cases, a private equity purchaser “may be preferred,” recognizing that private equity purchasers may have “flexibility in investment strategy,” be “committed to the divestiture,” and be “willing to invest more when necessary.”[12] The Division cites an FTC study in support of its favorable view of private equity purchasers, although the FTC has not expressed a similar preference in its remedies guide. Consummated Mergers. For the first time, the Manual explicitly addresses remedies for transactions challenged post-consummation.[13] The Manual recognizes that consummated mergers “may pose unique issues,” as the parties often have already integrated their assets, making it difficult to craft an effective divestiture that would eliminate anticompetitive effects. But the Manual reiterates that structural relief may be necessary in some circumstances to eliminate anticompetitive effects. For example, it may be necessary to unwind a merger and divest more or less than the acquired assets to effectively restore competition. The Division has advocated a similar point in prior proceedings, so this change does not mark a significant departure from existing Division practice.[14] Global Enforcement and Regulatory Collaboration. As antitrust merger enforcement and merger control has proliferated around the world, and is now a staple of antitrust enforcement in 120 countries and in state AG offices, mergers are commonly subject to multiple investigations by authorities in and outside the United States. The Manual includes new sections outlining the Division’s practice of collaborating with foreign and state antitrust enforcers to minimize unnecessary jurisdictional conflict structure remedies that are effective across jurisdictions.[15] The Division will also work with regulatory agencies to avoid inconsistent requirements. While the Division will consider the impact of regulations on competitive dynamics, the Manual notes that the “existence of regulation typically does not eliminate the need for an antitrust remedy to preserve competition effectively.”[16] Consent Decree Terms. The Manual also provides greater detail on consent decree terms that the Division likely will require in future settlements.[17] For example, the Manual recommends consent decrees explicitly provide for Division appointment of a selling trustee,[18] and that, in certain circumstances, a decree may require the merged firm to report otherwise non-reportable deals.[19] And the Manual details certain “standard provisions” that must be included in consent decrees to allow for effective enforcement, including (1) reducing DOJ’s burden to establish violation of a consent decree from clear and convincing to preponderance of the evidence; (2) allowing the Division to apply for a one-time extension of the consent decree terms upon a court finding a violation; (3) allowing the Division to terminate the decree upon notice to the court and the parties; (4) allowing courts to enforce provisions that are stated specifically and in reasonable detail; and (5) requiring parties to provide reimbursement to the Division for costs incurred in connection with a successful enforcement effort.[20] While the Division has increasingly been including these provisions in their Final Judgments over the last couple of years, the Manual memorializes these requirements. As a whole, these new provisions will strengthen the Division’s ability to police and seek fines for alleged consent decree violations. New Compliance Unit. Lastly, the Manual outlines the responsibilities of the newly created Office of Decree Enforcement and Compliance.[21] This Office is charged with ensuring rigorous enforcement of merger remedies, and it will evaluate and provide oversight over all remedies. While on its face this new office appears to mimic the FTC Bureau of Competition’s Compliance Section, it will only monitor post-decree compliance, whereas the FTC’s Compliance Section is an active participant in remedy negotiations. Whether this has a practical impact on DOJ merger remedies remains an open question. FTC Chair and EC Competition Commissioner Signal Increased Scrutiny of “Below the Radar” Transactions Also noteworthy are recent statements by FTC Chairman Joseph Simons and EU Commissioner for Competition Margrethe Vestager[22] promising stepped-up review and scrutiny of “non-reportable transactions”—that is, deals that fall below applicable merger reporting statutory thresholds. Referring to so-called “killer acquisitions” in which transactions by established incumbents that take out a nascent or potentially disruptive competitor, Commissioner Vestager observed that “there are a handful of mergers each year that could seriously affect competition, but which we don't see because the companies’ turnover doesn't meet thresholds” that would trigger a mandatory filing and review by the European Commission.[23] Commissioner Vestager promised to use an existing provision, Article 22 of the EU Merger Regulation, which allows the European Commission to review transactions that affect “trade between member States and [threaten] to significantly affect competition within the territory of the member State or States making the request.” Originally designed as a catch-all referral mechanism for EU member states lacking a home-based merger control authority, Article 22 contains no minimum filing thresholds, giving the Commission a tool to immediately implement Commissioner Vestager’s policy announcement. Likewise, the FTC has recently directed several large technology companies to provide information about acquisitions that were not reportable under the HSR Act to “better understand” some of these non-reported transactions, in particular, those of nascent or potential competitors.[24]  Chairman Simons noted that “[o]ne potential outcome of this study is that we may decide to issue an additional special order requiring premerger filings for acquisitions by these companies at levels well below the normal statutory thresholds” and that the FTC would have “the option” to take an enforcement action “where warranted.”[25] Following this statement, the FTC also announced that it has revamped its Bureau of Economics’ Merger Retrospective Program to expand the Bureau’s retrospective research efforts analyzing the effects of consummated mergers over the last 35 years.[26] These actions followed Chairman Simons’ February 2020 announcement of the FTC’s investigation of the large technology companies.[27] A statement by Commissioners Christine Wilson and Rohit Chopra from February 2020 echoed Simons’ sentiments, stating that the “Commission will benefit from a deeper understanding of the kinds of transactions – and the nature of their competitive impact – that were not reportable under the HSR requirements.”[28] Chairman Simons’ and Commissioner Vestager’s statements continue a recent pattern of enforcers signaling increased scrutiny of transactions that fall below applicable reporting thresholds—scrutiny that is designed to target acquisitions of potential or nascent rivals to the acquiring company. Transactions in the tech and pharma sectors where startups often generate little or no revenue, but might potentially pose a competitive threat in the future, could be subject to investigations under this new policy. In the United States, parties may consummate a transaction only to later discover that the FTC has opened an antitrust investigation that casts doubt on the deal’s ultimate prospects. In Europe, there will be an increased chance that a relatively small transaction may nevertheless be subjected to a more involved and burdensome EU-level review (as opposed to review at the member state level). This increased uncertainty will have a knock-on effect for transaction planning and documentation, which must account for expected regulatory filings and clearance timelines. _____________________    [1]   U.S. Dep’t. of Justice, Justice Department Issues Modernized Merger Remedies Manual (Sept. 3, 2020), available at https://www.justice.gov/atr/merger-enforcement.    [2]   The Federal Trade Commission adopted its own guide to negotiating merger remedies in 2012 that remains in effect. Federal Trade Comm’n, Negotiating Merger Remedies (Jan. 2012), available at https://www.ftc.gov/system/files/attachments/negotiating-merger-remedies/merger-remediesstmt.pdf.    [3]   U.S. Dep’t. of Justice, Antitrust Division Policy Guide to Merger Remedies – June 2011, https://www.justice.gov/atr/page/file/1098656/download.    [4]   Federal Trade Comm’n, Negotiating Merger Remedies (Jan. 2012), available at https://www.ftc.gov/system/files/attachments/negotiating-merger-remedies/merger-remediesstmt.pdf.    [5]   U.S. Dep’t. of Justice, Merger Remedies Manual (Sept. 2020), available at https://www.justice.gov/atr/page/file/1312691/download at 12 (“Manual”); see also id. at Part III.B (“Structural Relief Is the Appropriate Remedy for Both Horizontal and Vertical Mergers”).    [6]   Id. at Part III.B.1 (“Conduct Relief to Facilitate Structural Relief”).    [7]   Id. at Part III.B.2. (“Stand-Alone Conduct Relief”).    [8]   Id. at Part III.F (“Characteristics that Increase the Risk a Remedy Will Not Preserve Competition”).    [9]   2004 Guide at Part IV.H (“Crown Jewel Provisions Are Strongly Disfavored”). [10]   For example, the FTC’s consent decree in connection with Pinnacle Entertainment’s 2013 acquisition of Ameristar Casinos contained a “crown jewel” clause providing for a potential forced divestiture of Ameristar’s St. Charles casino—a centerpiece of the transaction—if Pinnacle did not divest the Lumiere casino identified by the FTC as the source of competitive concern. See Federal Register Notice: Analysis of Agreement Containing Consent Orders to Aid Public Comment; Proposed Consent Agreement, August 19, 2013, https://www.ftc.gov/sites/default/files/documents/cases/2013/08/130819pinnaclefrn.pdf. [11]   Manual at Part IV.A (“Identifying a Buyer”). [12]   Id. at Part IV.B (“The Division Must Approve the Proposed Purchaser”). [13]   Id. at Part III.D (“Remedies for Transactions Challenged Post-Consummation”). [14]   See Brief for the U.S. as Amicus Curiae in Support of Appellee Steves and Sons, Inc., Steves and Sons, Inc. v. Jeld-Wen, Inc., No. 19-1397 (4th Cir. Aug. 23, 2019) (arguing that laches should not bar all private-party divestiture suits even after a merger has been consummated, as a party may be injured by a merger after it has been consummated, or the threat of antitrust injury may not materialize until post-closing). [15]   Manual at Part III.E (“Collaboration When Structuring a Remedy”). [16]   Id. [17]   Id. at Part VI (“Decree Terms”). [18]   Id. at Part VI.C (“Selling Trustee Provisions Must Be Included in Consent Decrees”). [19]   Id. at Part VI.F (“Prior Notice Provisions May Be Appropriate”). [20]   Id. at Part VI.I (“Consent Decrees Must Include Standard Provisions Allowing Effective Enforcement”). [21]   Id. at Part VII.A (“The Office of the Chief Legal Advisor Oversees Compliance and Enforcement”). [22]   “The Future of EU Merger Control,” International Bar Association Annual Conference (Sept. 11, 2020). [23]   Id. [24]   Prepared Remarks of Chairman Joseph Simons, ICN 2020: Digital Showcase Introductory Remarks (Sept. 14, 2020), here. [25]   Id. [26]   Press Release, Overview of the Merger Retrospective Program in the Bureau of Economics, FTC (Sept. 17, 2020), here. [27]   Press Release, FTC to Examine Past Acquisitions by Large Technology Companies (Feb. 11, 2020), https://www.ftc.gov/news-events/press-releases/2020/02/ftc-examine-past-acquisitions-large-technology-companies. [28]   Statement of Commissioner Christine S. Wilson, Joined by Commissioner Rohit Chopra, Concerning Non-Reportable Hart-Scott-Rodino Act Filing 6(b) Orders (Feb. 11, 2020), here. The following Gibson Dunn lawyers prepared this client alert: Adam Di Vincenzo, Kristen Limarzi, Chris Wilson, Kaitlin Zumwalt and JeanAnn Tabbaa. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please feel free to contact the Gibson Dunn attorney with whom you usually work, the authors, or any member of the firm’s Antitrust and Competition Practice Group: Antitrust and Competition Group: Washington, D.C. 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) 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) Lawrence J. Zweifach (+1 212-351-2625, lzweifach@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) Attila Borsos (+32 2 554 72 11, aborsos@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) © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
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September 15, 2020

Supreme Court Round-Up (September 2020)

Gibson Dunn’s Supreme Court Round-Up provides the questions presented in cases that the Court will hear in the upcoming Term, summaries of the Court’s opinions when released, and other key developments on the Court’s docket.  To date, the Court has granted certiorari in 30 cases and set 1 original-jurisdiction case for argument for the 2020 Term, and Gibson Dunn is co-counsel for a party in 1 of those cases. Spearheaded by former Solicitor General Theodore B. Olson, the Supreme Court Round-Up keeps clients apprised of the Court’s most recent actions.  The Round-Up previews cases scheduled for argument, tracks the actions of the Office of the Solicitor General, and recaps recent opinions.  The Round-Up provides a concise, substantive analysis of the Court’s actions.  Its easy-to-use format allows the reader to identify what is on the Court’s docket at any given time, and to see what issues the Court will be taking up next.  The Round-Up is the ideal resource for busy practitioners seeking an in-depth, timely, and objective report on the Court’s actions. To view the Round-Up, click here. Gibson Dunn has a longstanding, high-profile presence before the Supreme Court of the United States, appearing numerous times in the past decade in a variety of cases.  During the Supreme Court’s 5 most recent Terms, 9 different Gibson Dunn partners have presented oral argument; the firm has argued a total of 16 cases in the Supreme Court during that period, including closely watched cases with far-reaching significance in separation of powers, administrative law, intellectual property, and federalism. Moreover, although the grant rate for petitions for certiorari is below 1%, Gibson Dunn’s petitions have captured the Court’s attention: Gibson Dunn has persuaded the Court to grant 29 petitions for certiorari since 2006. *   *   *  * 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 attorneys in the firm’s Washington, D.C. office, or any member of the Appellate and Constitutional Law Practice Group. Theodore B. Olson (+1 202.955.8500, tolson@gibsondunn.com) Amir C. Tayrani (+1 202.887.3692, atayrani@gibsondunn.com) Jacob T. Spencer (+1 202.887.3792, jspencer@gibsondunn.com) Joshua M. Wesneski (+1 202.887.3598, jwesneski@gibsondunn.com) © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
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