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The Role of Trustees in EC Competition LawDavid Davies
COMPETITION
ADVISORY
2
Overview
Implementation
Team required
Key initial actions
Possible problem areas
Key learning points
3
Implementation – the team may include . . .
Board
Senior Management(businesses retained)
Key shared services personnel
Group IT personnel
The Steering Group
Head of Legal
Director M&A
Seniorbusinessexecutive
External competition
lawyers
Hold SeparateManager
Divestment Business A
ITLegal
Other operationalexecutives
Divestment Business B
Hold SeparateManager
ITLegal
Other operationalexecutives
4
Implementation – overview of first two periods
Indicative timings for larger merger
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8
Kick off
meetings
Trustee briefings and site visits
Hold separate / viability / carve-out proposals
Implement hold separate / viability / carve-out actions
Divestment process
- Monitoring Trustee’s monthly reporting- Parties’ divestment reporting
5
Implementation – initial divestiture actions
Consider appointing investment advisers
Preparing Information Memorandum, bidding instructions, data room, etc
Identifying / contacting prospective purchasers
Planning / starting ‘carve-out’ activity – eg allocation of personnel, asset splitting, et
Agreeing reporting responsibilities
6
Implementation – initial viability issues
The performance of the Divestment Business against agreed strategy and business plan
Key customer, supplier and other contracts
R&D and capital expenditure programmes
Key shared services
Retention / incentivisation of Key Personnel
Regulatory compliance
7
Implementation - hold separate / ring-fencing
Appointing / briefing Hold Separate Manager(s)
Sending employee briefings / notifications
Reviewing reporting lines, roles and responsibilities
Content / circulation of management info’
Identifying and reviewing services provided to the Divestment Business
Preparing and signing confidentiality agreements
Reviewing physical separation / access controls
8
Implementation - IT hold separate / ring-fencing
Identifying relevant IT personnel and infrastructure
Briefing Trustee’s team on IT infrastructure
Determining list of authorised users
Limiting access to Divestment Business data
Agreeing appropriate access controls and / or signing confidentiality agreements
9
Possible problem areas - divestiture
No suitable purchaser
Extensions of time limits
Insufficient information to demonstrate compliance with the Purchaser Requirements
10
Possible problem areas - other
Differences between EC and FTC requirements
Disputes - extent of Trustee’s powers
Partial relaxation of commitments needed
11
JV dissolution scenario
Merger
C
49% 51% & Lead Operator
European JVs
A B
12
Implementing hold separate arrangements
49% 51% & Lead Operator
European JVs
A B CMerger
integrationactivity
13
B
Maintaining viability
49% 51% & Lead Operator
European JVs
A CMerger
integrationactivity
14
A
Enabling merger integration
49% 51% & Lead Operator
B C
European JVs
Filtered data
Merger integration
activity
15
A
Dissolution and merger integration completed
Corp A
JV businessfully
integrated
JV businessfully
integrated
Merged B&C
16
Key learning points . . .
Prior to making commitments, consider the practicalities of implementing them
Early nomination of Trustee and planning
Identification and briefing of team members
Open and constructive dialogue with Trustee to plan and implement the commitments
Strong ongoing project management
‘No surprises’ approach with the Commission
Questions
18
Contact details
David DaviesHead of CompetitionKPMG Forensic20 Farringdon StreetLondonEC4A 4PP
Email: [email protected]
Tel: +44 (0) 20 7311 3804Fax: +44 (0) 20 7311 3630